Tony:
The "rules of thumb" that apply to large-scale commercial software do not apply
to specialized software with such a small distribution as CT or NA or TR.
Some of these companies are selling hardware and software, and the cost-recovery
formula for software is all over the map.
The company I used to work for sold hardware and software. For many years, the
software was "thrown in for free" with the hardware rental or purchase. And that
included on-site custom software development. This made it hard for independent
software companies to get started.
The company I now work for sells a lot of PC software. The consumer price is
very low. But we sell millions of copies, and it is a very competitive market.
As the volume goes up, the development cost becomes a smaller percentage of the
total cost picture, and costs of marketing, distribution, materials (CD-ROM
versus diskette) and books in the box, support, and advertising become very
significant. There is a very focussed effort to control costs, particularly
per-unit costs, in order to keep the prices low enough to keep the volume up so
that you can afford a significant R&D and marketing effort (which doesn't go up
as the number of units goes up).
My wife is a court reporter. She has a specialized PC DOS application that
helps her translate machine shorthand into editable text. This is a limited
market, perhaps a few thousand customers at most. She paid about $3000 plus
about $500 a year for "technical support", which includes software maintenance
and upgrades. She has an 800 number she can call at any time, and it's staffed
by people that can get answers. The software comes on 3 diskettes, and that
includes several large dictionaries and lexicons, so the software effort isn't
really all that huge as these things go. And this is a good business deal for
my wife. She looked at several competitive packages, and she wasn't
particularly price sensitive. She uses this software every day to generate her
income. It's the small numbers of demanding users that make this a reasonable
figure. The company is reasonably responsive to requests for new features. She
wants this company to stay in business in order to support this software.
I think the reason we expect low-priced software is that our expectations are
set by the prices for mass market consumer software like games, spreadsheets,
and word processors. Take a look into the market for the prices of software
tailored to specialized fields with good support. The prices are quite high.
And they're often a great business deal for the customer.
I spend a fair amount of money and time on antennas, radios, computers, internet
providers, telephone lines, and software for other applications. Why not a
hundred annually for great contesting software for a hobby that's important
enough to me to dedicate many hours several weekends a year? My perception of
the contesting experience is very much dependent on the capability and quality
of that software. At 36 hours into a contest, do I worry about saving a few
tens of dollars on logging software? Some people go on pretty expensive trips
to rarish locations for contests. Wouldn't a few hundred dollars spent on
contesting software be a drop in the bucket?
The public domain versions of any of the popular logging programs suffice for a
casual entrant. Those of us that want the best software available should expect
to pay enough to make it worthwhile for a few groups of people to make a career
out of contest logging software development and support. I want a field with
healthy competition and choice. And there's nothing like the profit motive to
stimulate that competition.
Using a percentage of a small amount is erroneous. It costs a certain
per-customer amount to open the envelopes, deposit the checks or run the credit
card numbers, and answer the phone or e-mail for technical support.
This is why software manufacturers can sell software so cheaply to PC vendors.
If it is sold with the machine, the software developer deals with one very large
customer ready to move a lot of units. The software company doesn't have a
per-unit transaction or an individual customer support task to deal with. Some
end users require a great deal of support for what seems absolutely trivial.
73 de Dick, K6KR
>On Friday, 12/5 Tony KE6YNR wrote:
>But... The going rate for annual software
>maintenance for 'big' workstations (Sun, HP, etc.)is about 12% of the
>cost of the product; _not_ 44%. The 12% cost has the customer paying
>for bug fixes as well as feature enhancements.
>
>In line with software upgrades for personal computers, 40 to 50% would be
>an appropriate price to upgrade a major revision. Say from version 9.x.x to
>version 10.x.x. A mini upgrade could happen if significant features were
>added without the major rev incrementing.
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