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Thursday, June 28, 2007

Changing pricing model to survive for software product companies

Cusumano[1] observes that software company changing their pricing model to survive:
As prices of software products have fallen, the “99% of zero is zero” rule that I wrote about in The Business of Software has taken effect and forced many software product companies to close or sell to some larger competitor. Our database at MIT suggests we have “lost” nearly half of the public software product companies since their number peaked in 1997 at over 300. Product companies that have remained in the software business have had to adapt their strategies as well as pricing and delivery models. Product companies can no longer afford to spend enormous sums of money on R&D and marketing to build and sell features that customers do not want or use.

[1] "The Changing Labyrinth of Software Pricing" by Michael A. Cusumano, pp 19-22, CACM Vol 50, No. 7, 2007.

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