I’ve been giving some thought lately on software pricing, and I think I’ve come up with an analogy that works (no it does not involve cars). The analogy concerns music, since that’s also something I feel comfortable writing about.
The central issue at hand is this: whenever I quote a client for (complicated project), they usually initially be like “SO MANY ZEROES AFTER THE COMMA???”. Sure, dude, you’ve just asked me to commit to 3 or 6 or whatever month’s of fulltime work, what did you think? Still for some reason non-technical people tend to think of “programming” as “well you just change a few things in an Excel file, right?” Ehm, wrong.
Let’s rewrite that in terms of music. Your 50th birthday is coming up – you’re giving an awesome party, and you need a band to play there. Okay, can do. You go to an agency and state your budget. It’s EUR500,- (which is sort-of reasonable for a not-too-awesome band, but really pushing it already). The agency shows you some samples, and one coverband plays a lot of Queen. You happen to like Queen, but this particular singer isn’t a very good Freddie Mercury impersonator.
“You got a better one in the Queen department?” you ask.
“Sure” says the agency, “we have AwesomeQueenCoverbandAlmostCantDistinguishFromTheRealThing”, but they charge ten times as much. Ouch. Okay, that’s WAY out of your budget.
“Ehm, anything in between?” you ask. “Well,” the agency tells you, “we also book The Kings” who are reasonable but only have two or three Queen songs on their repertoire.”
My point is this: you can’t expect Freddie Mercury to play your birthday bash unless you’re willing to pay top bill. It’s that simple. You also can’t expect to have a perfect impersonator play there unless you’re willing to pay serious money – not millions, but still a serious amount. These people have skills and are in demand. It’s the same for good programmers – they won’t code your local webshop for peanuts (unless maybe if you owe them a favour). These people have serious skills and would rather think about encryption schemes than your petty HTTPS connection. Learning and mastering an instrument takes a lot of time. The same goes for code.
I’ve seen McCartney a few times (which was awesome, by the way) and I’ve also seen good Beatles cover bands. I’m sure Macca got paid more, but the cover bands also didn’t come free. If you don’t care about quality – I’m a crappy singer – I’ll come and play the whole Beatles catalog at your party in exchange for a few beers. Pay peanuts, get monkeys – it’s as simple as that.
Nota bene: this is about custom proprietary software. I’ll write later on what I think is wrong with selling “software packages” a.k.a. Word, Photoshop etc.