Pricing strategy for digital media applications

I am developing desktop application for digital media. But i am still not sure how to set price for the application. Actually our product is integrated solution which integrates different features like, PowerPoint presenter, Photo Viewer, Video Player, Chart Viewer, HDF5 Viewer, Live Video Streaming, Browser and so on. Please advise how can i set ideal price?

You are looking for an answer that only your customers would know because they are the ones who is going to decide whether your product worth the value proposition. Is their problem worth paying lets say $20 ? How much pain do you relief from them ?

A Couple of considerations;

• What is the cost of a customer ?
• How many customers do you need to break even ?
• At least %30 profit margin for a healthy company...
• Is the result of the equation acceptable by the customer ?
• Do you like to have cheap customers, demanding lots of support ? Are you ready to handle as a company lets say 100K customers paying 5$ or 10K/50$ or 1K/$500.
• What is the cost of an alternative product ? E.g Photoshop is $600. So people are going to compare the value of two products..
• How much money does a user need to spend to have those features ? ( Product1 + Product2 + Product3 = Your Product if that is the case)
• Don't forget; Price is also the communication of the quality of a product.

There was a story about a French wine company which was very popular in local market and tastes very good. They enter to the US market and set the price lower than the competitors so that people are going to try. Seems like a nice deal right? Tastes very good. Foreign quality product. Cheap price vs competitors.

Guess what ? It did not sell. The company went nuts. They did not understand what is going on. They hired a PR agency to market the product. So what they did was higher the price!

Price is a perception. If Apple's products were priced much lower, would you consider it as that much of a quality ? Macbook Pro price starts at $999 in US, and in Europe its € 999. The price reflects the product's quality. It is a very good strategy and its used to position the product in the market Think about iPhone vs Android. BMW vs Toyota. Toyota even have a separate brand to sell higher price cars. Lexus.

Pricing is a complex topic. It is social and cultural as well. I do believe
the best strategy is testing, try different prices and evaluate the results, understand the data and keep on testing. Ask to your customers. They will tell you. Design a landing page and place a buy button with a price.

• Neil Davidson; the founder of RedGate software has a nice free ebook about the topic.
• Joel Spolsky; founder of FogCreek software and StackOverflow( software which powers this site) wrote lots of articles about pricing

There is no ideal price as well. Depends on your specific situation. Keep on reading, asking and testing. Your customers have the answer!

Look at your competition to get an idea of the range that is acceptable. Then set your price. Then double it. Start selling and see people react. Some people will always complain that your product is too expensive, ignore them. If people complain but buy anyway, you have the right price.

Most new startups price too low, because they are scared of charging too much. You learn quickly :-)

As has been aptly pointed out, Pricing depends on a lot of factors as is not as simple as it is though to be. Tow low and the quality's perception is bad , too high and the perception is to be out of range. I would suggest making auditing your product related cots , taking various pricing ranges and plotting it against the expected number of customers. Later, you can test out the pricing levels to find out which are working for you. Also try and build some positive buzz about your product in the form of testimonials, +comments and even contests. That will help it sell as a higher price point..( vis a vis peers)