From Joel Spolsky’s Camels and Rubber Duckies: (some minor editing)
Software is priced three ways: free, cheap, and dear.
- Free. Open source, etc. Big companies are still a bit afraid of open source. They want someone responsible who will take their call when something goes south. Even if it’s just to complain about the lousy software they were sold. Open source feels risky because there is no one else to blame.
- Cheap. $10 – $1,000, sold to a very large number of people at a low price without a salesforce. Most shrinkwrapped consumer and small business software falls into this category.
- Dear. $75,000 – $1,000,000, sold to a few rich big companies using a team of slick salespeople that do six months of intense PowerPoint just to get one sale. The Oracle model.
All three methods work fine. Notice the gap?