Developers are Cheap

So a few months ago we released our CAB Installer SDK, and we decided to try out value-based pricing as a social experiment.  Our thinking was that developers make their living – and typically a more comfortable living than flipping burgers – and that the would a) understand the value of code and time saved and b) be willing to compensate us for the SDK based on their perceived value of the product.

We here we are a full four months later, and how is this experiment going?  Well here’s a graph that says it all:

What this says is that we’ve sold 51 “value units” to 37 customers, meaning that over 80% of you who bought it only paid $5.  Now assuming you’re a low-paid, entry-level guy making only $40k a year that means you felt it’s worth just over 15 minutes of your time (and keep in mind this thing comes with full source code).

What this tells me is that one of these must be the case:

1) The SDK sucks and has no value
2) People don’t understand “value-based” pricing
3) Developers are cheap bastards who will pay as little as possible for something

Well #1 is probably not true, as we’ve used it on a few projects and it works well.  I think we descibed value-based pricing pretty clearly, and it’s not a tough concept.  So all I can conclude is, well, #3 must be true.  Now we can’t really hold it against you, after all we did allow you to buy it for $5 and some people simply have low moral standards.  I’m just surprised it’s so many of you.

Will we change the pricing model?  Well I have two thoughts on that.

1) the current pricing includes zero support, so it’s no “work” for us to just leave it as-is
2) moving it to fully open source might increase the number of people using it

I’m inclined to go with #1, simply because moving it to open source requires a bit of work on our part.  In short, we’ll keep it out there as an apparent $5 product because I’m too busy to do anything else with it, but the likelihood of it getting any additional features is pretty slim.  It was an experiment that yielded data, and as such I’d say that it was valuable.  It certainly shows that it’s a pricing model that can’t be used to support a business.

6 thoughts on “Developers are Cheap”

  1. I know for a fact that developers are cheap. Every one I know is cheap unless it involves their toys. However, I think there might be an additional factor in their cheapness in this instance.

    The CAB Installer SDK sounds really, really cool; but I really don’t know what it does. There are no examples of what it will do for me. There are no code samples, that I can find, that will show me how much coding it will save me. Nothing. All I have is your word.

    I’ve been happy with what I’ve seen from you in the past. I’ve been impressed with the performance and ease of use of your Community Edition framework; but that’s not enough.

    Your product may very well be the proverbial cat’s meow; or it might not. It might do everything I ever dreamed of; or it might not do what I need at all.

    I’ll plop down $5 or $10 to try something out, because I’m not out much if I don’t like it; but I’m not putting down anything more than that without concrete evidence that it will do what I need.

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  2. I was going to write about the lack of information on the product but the first comment covers it pretty well. If it does what we need it to then I’ll buy it!

    In my experience developers aren’t that cheap but the person controlling their budget is. In the early days of our company someone put in a request for a USB driver kit that cost $50 and it was turned down. Writing our own version took 6 months (since nobody had any experience) and we still get bug reports for it!

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  3. I bought it at the same time I bought the SDF. For $5 it didn’t really hurt to add it to the order and may come in handy at some point in the future. (To be honest I haven’t even looked at it since downloading.) I also bought a unit as an indication of the value I’ve got the OpenNetCf in general.

    I truly intend that if at some point in the future I use it and find it useful I will go back and purchase more units.

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  4. Another way of telling the story:

    the reason why nobody is buying our product:
    1. our product sucks.
    2. we didn’t do the marketing well.
    3. customers are all idiots.

    then start the elimination process:
    1. our product is perfect.
    2. we market it very well

    so we concludes: customers are all idiots.

    which is not, very, convincing.

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  5. What a cool experiment!

    Not satisfied with slinging code at the compiler and seeing what sticks, you decide to throw a radically new pricing model at your customer base to see what sticks. I like it; you guys got guts.

    Without knowing about the "value" that you mention, I have to say that — given a choice between paying $5, $10, $15, and $20 for the exact same thing, it is very difficult for me to want to pay anything more than the minimum. I am wondering if there is a way to put a "value" next to the purchase price, as in:

    $5 — I do not have a need for this now, but am curious about what it does.
    $10 — I can maybe think of one use for this, but not in the current version of our SW.
    $15 — I can think of one use for this today.
    $20 — Eureka! Your one bit of code will allow me to establish an Internet business and rake in hundreds if not thousands of dollars while I sleep. Thank god you did all the work and I get all the revenue!!

    or even…

    $5 — I am both an ignorant ass and a cheap bastard
    $10 — I am either ignorant or cheap
    $15 — I am ignorant, but willing to take your word for it
    $20 — I don’t believe in testing code, just as I don’t believe in animal testing.

    Better yet, perhaps, would be to ask your customer to tell you — in their own words — why they chose the price that they did. That way, you capture something about what they were thinking. As it stands, all you have is your statement that all programmers are cheap bastards.

    Incidentally, when marketing types do a real "price test", they send out adverts with just a single price to a split of their (presumably large) mailing list. That way, the $10 purchaser makes the decision without knowing about the $5 payment option.

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