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Calculating the True Worth of Software

Posted by Zonk on from the money-money-money-money dept.

chromatic writes "Many people recognize that the cost to duplicate a piece of software is a fraction of the number on its price tag. Many people also understand that software without support and maintenance loses much of its value. Is there a way to put a price on the software, support, maintenance, and the option for future upgrades itself? Robert Lefkowitz recently applied an options pricing model to software in ONLamp.com's Calculating the True Price of Software. Don't let the description fool you; it's both a readable and serious apologia of the common free software business model."

5 of 204 comments (clear)

  1. Koders does something like this... by tcopeland · · Score: 4, Interesting

    ...although simpler, I think. Apache 2 comes in at a half million dollars, Tomcat weighs in at $250K.

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  2. Joel on Software on the same topic by Psionicist · · Score: 4, Interesting

    How much should I charge for my software? http://www.joelonsoftware.com/articles/CamelsandRu bberDuckies.html

    You've just released your latest photo-organizing software. Through some mechanism which will be left as an exercise to the reader, you've managed to actually let people know about it. Maybe you have a popular blog or something. Maybe Walt Mossberg wrote a rave review in the Wall Street Journal.

    One of the biggest questions you're going to be asking now is, "How much should I charge for my software?" When you ask the experts they don't seem to know. Pricing is a deep, dark mystery, they tell you. The biggest mistake software companies make is charging too little, so they don't get enough income, and they have to go out of business. An even bigger mistake, yes, even bigger than the biggest mistake, is ...

  3. Re:Slashdot and SW by Saeed+al-Sahaf · · Score: 5, Interesting
    Most people here don't buy software - they get it from edonkey/torrents anyway.

    And this is an interesting point. I've always been amazed at the dollar figures the BSA gives out for the "value" of "pirated" software, avoiding the fact that a large percentage of these people would not have bought the legitimate copy anyway.

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  4. What the competition is charging ? by shashark · · Score: 4, Interesting

    You can't charge awefully more than your competition, can you ? If the competition gives it up for free -- then well, all your calculations go awry.

    Think about the price of a browser, media player and well, a operating system.

    Think Netscape vs IE circa 2000 AD. Now, only a free product could defeat IE.
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    1. Re:What the competition is charging ? by mr_gerbik · · Score: 4, Interesting

      Think Netscape vs IE circa 2000 AD.

      Netscape was dead by 2000.

      Think Google Earth, Picasa, and Gmail. But hey, Google buying up companies and offering the software for free to kill the competition is a honorable thing right? Not evil like when Microsoft did it.