Software Pricing

Software pricing is a sticky subject because of the many different ways to price a product. In this article I will go over some of the most popular pricing schemes and discuss the pros and cons of each.

Per Version

The per version pricing is the way most of the bigger companies price. For example Adobe Photoshop, you can purchase the latest edition and use it forever but to get the latest edition you have to pay an upgrade price.

In my opinion this pricing model benefits the customer more than the company because you can pay once and never have to pay again if you do not need the latest edition.

One Time With Renewals

This pricing scheme is you pay once then have a fee every year to continue to recieve updates and support. From what I have seen this is what most small businesses use because the company continues to get some type of recurring income to help them stay a float and the customer only has to pay a small fee which makes the overall cost of ownership pretty low. The downside to this model is keeping up with who has paid and if they have a valid renewal.

Monthly

This is normally a hosted application that you would pay monthly for. This is a big benefit for the company because they do not have to worry about theft and they continue to receive monthly income while you use the product. Of course the company would also have a larger expensive in servers and bandwidth.

Free with paid support

Free or open source product but you do not receive any support unless you pay for it. This scheme is really in the favor of the customer because they may never have to pay a dime if they do not need any support.

As you can see there are lots of different pricing schemes and although each has advantages and disadvantages I personally like the first two options the best. I believe they have the biggest benefit to both the company and the customer.