The New Economics of Software Pricing

Ok, it’s a hopeful title.

But maybe you can help get the word out.

Anyone who’s read a Steve Job biography knows the story of how, in the era of Great Worry about financial losses and pirating in the music business he got the record label executives  together around a conference table, beat some sense into them and iTunes was born. Soon everyone was swimming in profit again. More than a Billion downloads. More than a Billion Dollars. And not a penny needing to be spent in manufacturing, stock, or shipping.

Netflix in the US got the message and did the same thing with the movie industry.

When the App Store appeared in Mac’s OSX operating system, I remember looking up a program I wanted to update. That program used to cost $79 in disc form at the store (which was the only way to buy it then). There it was in the App Store for $19.99. I was already set-up for “One-Click” purchases, so I enthusiastically clicked on it and watched in amazement as the icon jumped off the page, into my dock and loaded itself in seconds. One click. I didn’t have to do a thing. One minute later I had the full program. $19.99. Cool!

A couple years later I wanted to upgrade to Lion. The complete operating system for Mac, with all its features cost a measly $19.

What does Microsoft Windows cost these days?

Ok, this isn’t about Mac vs PC, so don’t get your hackles up.

It’s about the way iTunes changed the world. And too much of the world hasn’t caught on yet.

I strongly feel that good software developers should be justly rewarded.  So this isn’t about screwing developers out of profit either.

I just think they’d make MORE MONEY if they started selling the stuff at a MUCH LOWER price.

Makes no sense? Read on.

CASE IN POINT

I was looking for a blueprint effect and stumbled on Pixel Film Studios.  They had it and it came with a dozen or two other related great graphic effects, (cartoon, paint, pencil, chalk, etc.) each of them with infinitely variable parameters. It cost $29.  I bought it.

They also had tons of other fantastic stuff for the same price and a few just a bit more ($34).  I bought their fog set too. 50 different fog templates, all of them infinitely variable. $29.

I’ll be back for more. Lots more.

Meanwhile I have tons of additional stuff loaded into my FX pane and every time I find one that I like and decide to pay for it, it’s–oh $20 or so for a single effect or transition. I buy it because it solves a problem and I guess that’s the strangle hold they’re hoping for. But I don’t think too highly of the company and I sure don’t go telling everyone about them either. Oh, and I’m also going to be dumping them all out of my program. No more polite blackmail for me.

But I AM telling everyone about Pixel Studios.

Go to Boris, or Industrial Revolution, SUGARFX, and many others and it costs $100 or hundreds to get a package (and they boast it’s a 40% discount!). There are plenty I’d like to have and could use. But I haven’t bought one yet.

SO WHAT IF…

If 10,000 non-corporate editors want a certain effect that comes as part of a $100 (or more) package, how many sales are going to be made?

Shall we say 100?  So that’s $10,000 in sales.

If 10,000 non-corporate editors want a certain effect and find that effect with tons of related variations, each with controllable parameters for $25, how many sales are going to be made?  The better question is: Who wouldn’t pay $25 for exactly what they’re looking for and then some?  Shall we say in this case 8000? That’s $200,000 in sales.

Or, who wouldn’t pay 99 cents for a song they liked? Even when there’s a chance to pirate it for free.  It seems the answer to that is over a billion.

Look guys. The work is done. Sure it cost a bunch to get it made. But it’s done. It’s up there in the sky. You don’t have to package it. You don’t have to stock it. You don’t have to inventory it. You don’t have to ship it. You don’t have to do a damn thing.

If you want to make a lot of money, sell it to just about EVERYONE for a few bucks instead of selling it to a few for a few hundred.

(I don’t usually make this request, but use the buttons and share this one please)

2 responses

  1. In the interest of full disclosure I am publishing Allen Freeman’s comment and link. Pixel Film Studios was found to be buying and altering footage from MotionFX and selling it cheaper. I read the whole thing–and you must read the link to the end as the matter has been sorted, and whether true or not, Pixel did dismiss an employee as the culprit. Legal action has been dropped and apology accepted by MotionFX.

    In my opinion, Pixel Film Studios has a lot of material that MotionFX doesn’t, but that is not based on a deep study. As the matter between the two is settled and it is quite evident that no more copyright violations will occur, I will still buy from and promote Pixel.

    The good news, however, is that Allen’s comment introduced us to another fantastic supplier of effects, Motion and AE templates and much more, all reasonably priced. Check out http://www.motionvfx.com.

    This doesn’t change the point of the original intent of this article on a potential new paradigm in software pricing for the benefit of producers and consumers alike.

    Like

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