Expert: Scottgem - 6/17/2003

Question
Hello,

I work with a software company that has a single no product that solves a pressing need in the grocery industry. It is a system that integrates with all other major internal corp. systems.  We have a client that we sold it to for $300,000. My question is this: how is most major corp. SW (e.g. major accounting systems, ERPs, CRMs etc)priced?

We want to sell the license and get a different price from big companies than we do from small ones. We're not sure what is most common. Is it user based, cpu based or flat fee. Any info on major SW pricing (north of 200k) would be helpful. Thanks!

Answer
When you talk about software in that price range, pricing models are all over the board. I use one app for Facilities mgmt that prices based on square footage covered. Another is based on users. Other major apps are priced on sales, revenues, or just a fixed cost per license.

I can say that software in that class usually includes an annual maintenance contract.

What I think you need to do is look at what you need in terms of annual revenue. Then look at how many you might expect to sell annually. That's how you determine pricing.

Hope this helps,
Scott<>

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