What do you do when the sales of your software does not meet your expectations? Especially when it’s your first commercial product and you have no previous experience selling software?
In the past months we’ve noticed a phenomenon repeating itself with Binpress developers, which I like to call ‘The Price Lowering Syndrome’, and I’m sure happens with developers selling software everywhere. Whether its an online service, or a mobile app in the app store, what happens is really simple:
Stage 1: A new developer signs up and uploads a component/app or two.
Stage 2: Said developer waits about 3 days and does not see any sales.
Stage 3: Said developer lowers the component’s price, or makes it available for free, assuming it would change something.
But it never does change anything. So far, we did not see even one case where lowering the price resulted in more (or any – in some cases) sales. We believe it actually has the opposite effect.
We’ve discussed the perceived value of components on this blog a couple of times in the past, and it’s a concept that is important to understand. People are willing to pay for your app what they believe it is worth in dollars and cents. If you price it higher than that mysterious number they have in their minds, it’s too expensive, and people won’t buy. But we all know that.
The problem is, if you price your component or app too low, something interesting happens. While we expect most rational people to realize what a good deal we’re offering, in reality what happens is they get suspicious, and will usually assume that the low price means that sales are down, or that the product they are buying is of low quality.
In other words, lowering the price could lower the perceived value.
Think about it – would you give your credit card just to buy a $3.99 piece of code which you believe might save you approximately 7 minutes of programming? Probably not.
It’s more likely that you would do that for a $20 package, which you believe could save you a few hours of work.
Finding that sweet spot, where the price is exactly what the user thinks it should be, is an art (or a science, some say). But while most people are scared of pricing their products too high, it’s important to understand that pricing it too low could be just as bad.
Ignore your instinct and be patient
A few incidents already proved us right. Following our brains rather than going with our instincts, we asked developers to make their components more expensive, or add a commercial license to a free component. So far, in most cases, raising the price either helped sell more – or the same amount at a higher price – which resulted in higher revenues for the seller. One good example would be Magento Shopping Cart Rules Import-Export module, which more than doubled its price since it was launched without hurting it’s sales record one bit.
So if your component was just published, give it a chance before you jump to conclusions. Components hardly ever sell within their first week or two, sometimes it takes even longer. It takes time for component to get the exposure they need, get ranked on Google search results, generate some buzz, or sometimes people don’t buy on the spot, but come back and make a purchase after realizing it’s the best solution for them. While that happens, take the time to promoting your component.
Before lowering your price, try to figure out what is missing – is there a specific concern stopping visitors from buying it? Is the demo working properly? Pay attention to the feedback given in the component comments and give additional methods of promotion a chance (you can find many of those on this blog).
You can contact us at all times, through the contact form or the component review comment system – we do our best to help our developers with pricing and marketing, so you can leave it to us to tell you if your price is too high.