Pricing is difficult, in any field. Pricing professional services is so difficult that most professionals don’t even do it, choosing instead to bill their time. But this problem isn’t just limited to professionals. Software designers and app developers face the same problem. Which makes sense, if you think about it, because software is just knowledge in digital form. How a developer prices its applications can make all the difference between success and failure.
One app developer, Japan’s Information Architects, has some very sophisticated ideas about pricing, and unlike most developers, has been willing to share those thoughts. You’ve seen Information Architects’ work if you’ve been to my consulting firm Prefix’s site, which was designed using their excellent iA3 WordPress template.
Information Architects recently released a new app called iA Writer for the Mac. It’s a beautifully designed writing application with a minimalist style. (I’m writing these words on it now.) IA apparently took some heat for charging $17.99 for an app that has far fewer features than Pages or Microsoft Word.
But instead of ignoring those comments, CEO Oliver Reichenstein wrote an expansive post on IA’s site explaining the pricing process. All developers and anyone else who prices their knowledge should take the time to read it. Here’s the money quote:
In the eyes of the customer the value of a product is not proportional to its production cost. A beef filet cooked for 15 hours by 30 cooks doesn’t necessarily taste better than a cheeseburger. The customer doesn’t care how long it took you to do something. What customers look at is the exclusiveness and direct benefit of your offer. Or as Neven put it:
Pay $20 if you think you’ll get $20 of use out of the app. That is the only meaningful criterion to use.
If your offer is exceptional, your price can and should be. If you offer an exceptional product at low price it will be perceived and treated as a low value product, no matter how amazing it is.