How not to price your app

Written by on Feb 12 2009

How much to charge for your web application is a question with no right answer. You will never make everyone happy. Nor should you. I firmly believe that if you hear no complaints about the price then you are not charging enough.

Although you’ll never know for sure if your pricing is right, I can give you one example of a pricing model that is wrong. There is an online invoicing application that recently sent an email to all it’s users asking what they thought of being charged based on how much they invoice. I became very excited when I heard this because it meant that Less Accounting would be getting a whole new group of customers.

Here’s what they suggested:

  • $6/mo

    • $1,000 invoiced or
    • 320 hours tracked
  • $12/mo

    • $2,500 invoiced or
    • 800 hours tracked
  • $25/mo

    • $5,500 invoiced or
    • 1,600 hours tracked
  • $45/mo

    • $9,000 invoiced or
    • 6,400 hours tracked
  • $75/mo

    • $15,000 invoiced or
    • 16,000 hours tracked
  • $125/mo

    • $25,000 invoiced or
    • 32,000 hours tracked
  • $200/mo

    • unlimited amount invoiced and
    • unlimited amount hours tracked

I mean seriously, it’s so easy to invoice over $15K with one or two invoices. We see this all the time in Less Accounting. Is this worth paying $75/month? I don’t think so. The rational is that the software is being priced in the same manner as your credit card processing. Although I like the idea of paying more for using more, this is just ridiculous.

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Steven

Hi I'm Steven,

I wrote the article you're reading... I lead the developers, write music, used to race motorcycles, and help clients find the right features to build on their product.

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