The Fiducial Mark

Most software vendors know that pricing can be a complex beast to tackle.  There are so many strategies and perspectives on pricing that you could fill a book.  Wait a second, there ARE books on pricing…  I recently came across “Software Product Management and Pricing” and gave it a read.  The latter part of the book has some valuable insights, and I particularly liked this one:

“Customer expectations must also be managed: it makes economic sense for a vendor to sacrifice some growth for a longer term commitment; it makes no sense for a vendor to cut price for a renewal of business with no growth.”

The quote pertains to enterprise offerings, where the authors discuss special bids for large accounts.  The point is that price negotiation and discounting strategies should take the larger context of the business relationship into consideration.  Sacrificing long-term revenue for short-term gain is something that happens all the time.  While it may help with quarterly results, it rarely pays off in the long run.

Full reference: Kittlaus, Hans-Bernd, and Peter Clough. Software Product Management and Pricing. Springer-Verlag New York Inc, 2009. Print.