We write a lot on this blog about the nuances of the open-source ecosystem, and especially about the difference between free open-source and commercial open-source.
In the context of free and open-source software, free refers to the freedom to copy and re-use the software, rather than to the price of the software. … one should “think of free as in free speech, not as in free beer”.
Wikipedia on Free and open-source
The accepted definition of the ‘free’ part of ‘free open-source’ does not talk about being free as in costs no money (free beer) but about the freedoms afforded to the user of the software – being able to read, modify and distribute the source of the software (as in free speech).
The other day I came across a new initiative for funding open-source development, called the Bitcoin Grant. My first thoughts were “pretty cool”, but then my cynical side woke up and reasoned “how is this better than the old donation button most open-source projects have? it just limits who can donate and how you can use those donations. Pretty hard to pay salaries in Bitcoins (yet)”. A recently launched service called Gittip does the same thing but with US dollars.
I don’t have authoritative numbers, but from asking around and being involved in the community (mostly as a consumer of open-source), it seems that donations are rarely a driving force behind open-source. Why aren’t donations effective for open-source?
Can’t live on donations
How can donation money be used by open-source projects? Jeff Atwood was surprised to find out his $5k donation was left unused months after he had sent it to a .NET open-source project. He asked his friend, Jon Galloway, which responded “Open source projects run on time, not money. [redacted]“.
I recently came across a great and thorough answer on Quora on Pricing Software Products by Hiten Shah, and as it is a common theme on our blog here is a short version of the main points:
- End the price with a 9. It beats every other number, even lower numbers as pricing (for example $39 beats $37).
- Shorter prices look less expensive. Drop the decimal point and even commas from the number. Similarly, 99$ looks less expensive than 100$. We will soon be testing it here by removing the .99s from all of our prices.
- Anchor your pricing. This is a common advice we give to publishers – always put at least 2 licenses with different pricing. Quoting Hiten:
The easiest way to make your price look good is to anchor against some other price. This is why many retailers will list the MSRP right next to their actual price. It looks like a hefty discount even though it isn’t.
- Offer multiple choices. Similar to the point above, and I’ll repeat our advice – put up multiple licenses! Quoting again: Customers at lower price-points tend to demand a lot more time from support and don’t have great margins to begin with. Depending on how your customer base grows, you may want to drop your lowest price completely.
- Double Your Prices. We just wrote an entire post on this subject, and apparently we’re not the only one seeing this effect. Higher prices -> much higher revenue -> better margins -> better ratio of support / income.
- Test your pricing. We covered this in our original science of software pricing piece. Don’t be afraid to experiment with your pricing – but give it enough time to get useful data (about a month or two should be enough).
On a different note, we have been on a tear lately. Binpress has closed consecutive record months in revenue, and this one is already shaping up to beat them all. If you have good code, now is the time to publish!
Putting a price on software is one of the most difficult decisions for developers when releasing their own products. We’ve previously written about how to approach pricing like a science and how to address specific technical audience. We also shared a post about learning from price changes.
This time we want to share some insights from over 2 years of running Binpress, about what components sell the most and generate the most revenue, and how it relates to their pricing (and licensing). While we’re talking about Binpress components here, this article is relevant for selling any kind of business or developer oriented software.
Higher priced components sell better and generate more revenue. And it’s not even close
A question that pops up often when I describe Binpress to people in the know, is “why not use Github?” Well, allow me to explain:
We are not Github
Github is “social coding” – a Git repository service with social elements baked in. People publish their code and other people can follow their progress, submit issues or even contribute code (depending on permissions).
On the other hand, Binpress is a curated inventory of solutions for common needs in software development. It is a not a collaborative coding environment, but rather a publication platform for code authors. Elaborating on those differences:
July 2012 has just ended, and so did the first round of our community contributors challenge.
The top 3 contributors are:
- Mark Petherbridge, with a score of 6217 (nice job, Mark!). Mark wins a PlayStation Vita console (sponsored by Nexmo), and 12k$ worth of cloud hosting and services from our sponsor, Rackspace.
- Tope, with a score of 2892. Tope wins 1.5k$ worth of cloud hosting and services by rackspace.
- Kemal Taskin with a score of 2382. Kemal wins 1.5k$ worth of cloud hosting and services by rackspace.
Congrats to the winners and all the other community members who participated. We’ll be looking to spice things up and add more special prizes, especially for the 2nd and 3rd places, soon.
Big thanks to our sponsors Rackspace and Nexmo for contributing the prizes and sponsoring the content. A special mention goes out to Florian Strauß, that while didn’t participate directly did an incredible job of promoting his new component, Commander Cool, and had excellent results to show for it.
Looking forward to seeing what you guys can come up with this month!