I need help making a very difficult decision and I would like to solicit your input.  Harvey Software has produced shipping software for nearly 26 years now.  Every year our software gets easier to use, saves shippers more and more, and is now much easier to distribute thanks to the Internet and technology changes.  In the 1980’s through the mid 1990’s our software was used mainly by large manufacturers, wholesales and retailers.  It needed a lot of hands-on work to install.  Over the years we addressed the install and use issues so these slowly disappeared.   Around 1997 I decided to take the company in a new direction and expand our customer base.  My idea was to transform our shipping software product that was used mainly by big companies to become a multi-carrier tool that any size company could easily install and use.  I am happy to say we have gotten to that point but now I need to decide how to price our product for our market.

In coming up with the right price I have to come up with something that matches market expectations but yet makes us a profit.  Currently we offer our multi-carrier solution for $99.95 per month.  This includes not only our product but also unlimited toll free telephone support and all updates.  We mainly compete against carriers who give away their single carrier systems free to our potential customers.  Our biggest selling points are that we lower shipping costs by finding the best rate for the service needed, all carriers are shipped using a single interface, we connect to in-house systems and from merchant services like Google Checkout and Amazon stores, plus other benefits that are too numerous to mention.  Over time we have found that once a customer starts using our software, they need very little support and 99% of service can be handled with technology.

Sorry for the long description, but I felt I had to explain all this before I came to my question.  Since many members of SUN could be potential users, do you feel that a good price for our shipping software product would be $19.95 per month if we switched our support to self-service Internet support, email support and pay by the hour telephone support?  We would still have our $99.95 per month deal with unlimited toll free support as this would be an additional product offering.

Please let me know what you think, I truly value your input and comments.

Bert

Why don't you include a tutorial / cd or video that customers can access online for free so they know how to use the software.  They they won't need to call in or spend an extra 20$ for additional support.

Right now, I use USPS online for INTL shipment and Fedex Ship Manager for US shipments. Shipping and package information is entered manually on the screens.

But I don't pay any extras. I just pay whatever is the actual shipping rate (USPS online discount, and Fedex volume discounts)

But when my volume reach more than 50 packages a day, I'd be definitely interested in the CPS $19.95/mo. service.

... Maybe, tier your pricing based on the number of packages sent. That way, low volume shippers won't feel they're overpaying, while high volume shippers feel they're getting a great deal.

$9.95 - up to 100 packages

$19.95 - up to 250 packages

$49.95 - up to 500 packages

$99.95 - unlimited

The above numbers can be per day limit, or per month limit.

.. i.e. make the barrier to entry very low.

Hi David,
 
Thanks to you (and others) for the feedback.  We certainly do want to charge what the market will bear for the sales volume goals we have.
 
Here is the primary issue we face.  The way our software is used does not easily lend itself to being a commodity type of good or an "impulse" type of purchase.  There can be lots of components in a shipping system, creating a considerable lead time between a company's initial investigation into our shipping system (and others) and the purchase.  We've had our product priced at $99.95 per month and, due to several forces re-shaping our market, are ready to change our approach and price with the goal to gain customers to offset the price change.
 
From what you say, it appears that $19.95 could be an attractive price for this, but you suggest, correctly, that we should try other prices.  This is something we intend to do, but the nature of our market with its long lead time means trying different prices will take a while.  By my original description, in addition to your suggestion to price test, do you have any opinion, comments, etc., about the total approach we intend to use in conjunction with the price change $19.95?
 
If anyone else has thoughts about this, I would like to hear from you, too.
 
David, thanks again.

Bert

Hi Brittany-Ash,

Thanks for the quick reply.  CPS already includes online and internet support, we are also looking to add video type instructions.  Have you been able to figure out how to use software that way or have you needed to call the company anyway?
 
In addition to this question, if you (or anyone else) have any additional thoughts along this line, please let me know.
 
Brittany-Ash - thank you again for responding.

Bert

Hi Bert:

Thanks for further explaining your situation to me. It appears I may have misunderstood you initially. But if I'm understanding you correctly now, you are only using the $19.95 price as something of a loss-leader to snare long-term customers.

Am I correct in that assumption? If that's the case, it's really not necessary to test various prices. Continue using the $19.95 price, until it reaches a point of diminishing returns.

David Jackson

Thanks, David.

If we go ahead with this, it will be an interesting project. Done correctly, we expect the $19.95 product to support itself with our other products as additional items to be purchased, making the whole program profitable without a loss leader. If you have any other thoughts, please let me know.

One sort of related question for you. I've been part of SUN for a while. It seems like if I'd put this post out last year I would have seen quite a few answers, help, comments, etc. I do appreciate the replies I received and feel SuN is valuable, but it seems like in the past I might have seen pages of replies instead of a handful. My question is - have you seen this same kind of thing happening recently on SUN?  Maybe it's just this post. Thanks for your feedback on all of this.

Bert

You're quite welcome, Bert.

I've noticed the same thing with this forum, regarding the number of replies to a topic. Apparently, the forum has lost a lot of its regular members.

But in my opinion, that's a good thing. Because the regular members weren't very friendly, or welcoming to new members. I'm delighted to see new members take their place. There's a lot less conflict in the forum these days.

David Jackson