What if your customers ask how much your software costs you to make?

We have built a white-label forum software that we license to B2B customers for internal use. One question that sometimes comes up during the sales cycle is: "How much does it cost you to make?".

Which is a strange question to answer -- it's harder to answer that for a software than for a hardware product. Reason being the cost of another unit of software is almost non-existent.

How do you answer such questions from customers? Without sounding harsh as you do want to close that client.

You could punt and state something along the lines of - it took X man hours to validate the market need / customer demand, and then Y man years of development to bring the idea to fruition. Once the code was placed in front of customers, there was several iterations required to address use cases. Not that we're on revision Z, we are on a constant release schedule updating the codebase several times a (duration).

We have found that such an investment was necessary to deliver a solution that our customers felt would meet their needs. While many customers have a similar need for our services, the X+Y man hours investment plus the constant update requirements was not something that would deliver the appropriate ROI for their organization. But - as a SaaS, it worked perfectly.