Value of Software

If you’re a manufacturer, you are probably not getting paid enough for your software.

How do I know this?

Well, because I see it all the time. But really, because you probably use cost plus pricing. Sure you try to get away from it. But the company really relies on it.

And so what ends up happening is our salespeople will go out and and negotiate deals. But we know we have to hold some price above our cost, some margin for us to maintain.

Well, guess what? What’s the cost of the next unit of software? It’s almost zero. So salespeople could discount software to almost nothing. They haven’t given up the margin that they’re graded on.

And so therefore, it’s so easy for us salespeople and business people to just discount or give away the software. What you really want is for your salespeople and your business leaders to be thinking about value.

How could they sell value? What’s the value of your software to your customers? You do realize that software companies make a ton of money selling something that has almost zero marginal cost.

If you’d like to learn more about how your organization can fearlessly raise prices now, join us for a two day workshop. I’m Mark Stiving, I’ve been teaching pricing for 30 plus years, and I would love to be able to help your organization.

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