Joel Spolsky — in his usual combination of good sense and humor — this week put out Camels and Rubber Duckies which tries to answer the question “How much should I charge for my software?”. As Joel warns up front, you’ll learn a lot more about pricing but still won’t know how much to charge.
In a straightforward path, Joel leads to the idea of segmentation, or charging different customers different prices. Airline tickets are the classic example of such segmentation, but it doesn’t seem to work as well in the software business. Joel includes some good arguments against site licenses and other pricing practices along the way.
Reading this reminded me of Talus Solutions, a company I almost joined back in 1998. Their product/service was providing revenue-optimization software for airlines and the like. The work seemed really interesting, but I decided to go with Palm instead. Talus was eventually bought by Manugistics and I’m not sure they have anyone here in Silicon Valley any more.