No, this isn’t a book review about gambling. although it tends to be the way most companies price their product, especially when the product is software. Why is that?
Pricing a software product is a difficult, challenging task. The problem is that the cost of software doesn’t lie in making another copy. The marginal cost to make an additional unit is effectively zero. The internet has eliminated the cost of distributing it. So if production and distribution are free, what makes software so expensive?
It’s the cost of the people required to develop, market, and sell it. These elements add up quickly and can get very expensive.
In Don’t Just Roll the Dice, Neil Davidson addresses the difficulties pricing software. And as the subtitle states, it is a ‘usefully short guide to software pricing,’ with the operative words being short and software.
At under 100 pages, the book is concise and to the point. Davidson doesn’t beat around the bush or use flowery language. It’s pretty obvious that he didn’t have to meet a publisher’s target page count. He writes what he needs to explain his points. Nothing more. Nothing less.
More important, the book focuses specifically on pricing software. While he does review basic economic pricing concepts, he recognizes that pricing software is different than pricing computers, cellphones, office supplies, cars, and other physical items where there is a cost associated with the product’s manufacture.
What I liked about the book, besides it being short and to the point, is that Davidson writes from his experience. He’s been in the trenches. He’s run startups and has experimented with what works and what doesn’t. He shares these experiences with you. While some things I knew already, there were some good reminders, and a few critical nuggets of wisdom too. One of most valuable pieces of wisdom he shares is that “practice trumps theory.” In other words, you can read all you want about pricing, but you won’t know what works until you try it.
This isn’t the most comprehensive book you can read on pricing, but that’s not its target audience. It’s focused on software pricing, and more specifically on early and growth stage companies that don’t have an established, profitable business model. If that applies to your situation, I would highly recommend Don’t Just Roll the Dice, particularly if you are just starting out or getting ready to launch a product.
If you are interested in reading it, the book is available on Amazon, but you can download it for free from the Red Gate Software website .