11 Replies - 1339 Views - Last Post: 15 August 2012 - 01:33 AM

#1 AVReidy  Icon User is offline

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Proprietary software these days

Posted 13 August 2012 - 10:22 PM

If you're like me, you can tell roughly how much things should cost based on their complexity and/or the resources that went into their production. When I look at software I usually put my own price on it, but it's almost invariably wrong.

Some of the most high end software costs below $50, like Mac OS and the Windows 8 update. But some relatively simple applications (simple compared to operating systems) like proprietary IDEs, WordPress themes, Dreamweaver, Photoshop, and CAD software often cost hundreds or even thousands of dollars.

It's just not proportional. I have trouble seeing how consumer demand allows a drawing program to cost hundreds more than the operating system it depends on. I'm confused. How does a developer know how to price his software? Should it be something that would be difficult to replicate by a small group of open source coders?

Are programmers who want to sell software out of luck if they can't make Visual Studio or Mac OS themselves? Is software development a field in which its practitioners can only make money by working on a website/application for some company?

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#2 GWatt  Icon User is offline

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Re: Proprietary software these days

Posted 13 August 2012 - 11:45 PM

Take into account that operating systems come bundles with hardware. If computers didn't come bundled with operating systems the demand for OSes would be much higher.
Also, I think it's unfair to say that operating systems are necessarily more complex than other applications. Photoshop and any other heavy duty image editors are pretty complicated. I'd feel more confident writing an OS than a photoshop clone or a CAD.
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#3 Skydiver  Icon User is offline

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Re: Proprietary software these days

Posted 14 August 2012 - 07:06 AM

There is also the economies of scale. How many people need an OS versus how many people need Autocad?
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#4 modi123_1  Icon User is online

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Re: Proprietary software these days

Posted 14 August 2012 - 08:36 AM

Quote

Should it be something that would be difficult to replicate by a small group of open source coders?

What? why would that be factored into it?

Quote

Are programmers who want to sell software out of luck if they can't make Visual Studio or Mac OS themselves?

Where is this criteria coming in from? It seems superfluous and a bit ridiculous. There are plenty of people who make perfectly fine software and compete on their level. A good case, since I am guessing you are talking about Photoshop and Gimp, is Artrage. They are not as complex or crazy broad like Corel or Photoshop, but for thirty bucks they do the trick on the small consumer market.

Quote

Is software development a field in which its practitioners can only make money by working on a website/application for some company?

I am certain the mobile app and indie game disprove this..
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#5 AdaHacker  Icon User is offline

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Re: Proprietary software these days

Posted 14 August 2012 - 11:08 AM

View PostAVReidy, on 14 August 2012 - 01:22 AM, said:

...you can tell roughly how much things should cost based on their complexity and/or the resources that went into their production. When I look at software I usually put my own price on it, but it's almost invariably wrong.

Where did you get the idea that the cost of a product should be proportional to how much work goes into building it? The fact that your estimates are almost always wrong should be proof enough that this is a bad assumption. Clearly development plays a role, but there are other, more important factors that determine a product's price.

View PostAVReidy, on 14 August 2012 - 01:22 AM, said:

I'm confused. How does a developer know how to price his software?

If he's smart, he does his market research. He would need to know who his target customers are, the size of his market, how much competition there is, what revenue streams are available, etc. There's no magic formula for choosing a price - there are lots of factors that come into play and choosing an effective pricing strategy is about balancing things in the way that optimizes the income stream for your business. That's why it's such a difficult problem for any business - there are a lot of inter-related variables and no real way to be sure if you have the right answer.

There are plenty of articles on the web describing how to price software products if you want to get some ideas as to how the thought process looks.
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#6 Lemur  Icon User is offline

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Re: Proprietary software these days

Posted 14 August 2012 - 11:58 AM

Wordpress designs and custom software are just that. Custom. You want something special you had better have the wallet to back it up. Most high profile WP designers will scoff at anything less than 125$/hr. You don't want to know what freelance devs tend to charge...

The point is, when someone knows that they have something unique, you get to pay a higher price. It's the typical water versus diamonds scenario, we all need water to live but its infinitely cheaper than even the smallest of diamonds which have no significance in keeping us alive (assuming you're dating a levelheaded and sane woman...)
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#7 AVReidy  Icon User is offline

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Re: Proprietary software these days

Posted 14 August 2012 - 12:06 PM

I guess software is just a different medium. I can't shake the idea that something with the complexity of a fighter jet sells for less than something with the complexity of a children's book - it just seems off.
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#8 modi123_1  Icon User is online

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Re: Proprietary software these days

Posted 14 August 2012 - 12:11 PM

Would you explain how you are assigning complexity levels of software? What are the measurements and quantification that says "you are a fighter jet.. you are a children's book"?
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#9 Lemur  Icon User is offline

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Re: Proprietary software these days

Posted 14 August 2012 - 12:14 PM

View PostAVReidy, on 14 August 2012 - 02:06 PM, said:

I guess software is just a different medium. I can't shake the idea that something with the complexity of a fighter jet sells for less than something with the complexity of a children's book - it just seems off.



Again, the Diamond and Water paradox. Basic economics in College will teach you about this. Look into taking Macro and Micro Economics and they'll both cover the topics of scarcity and demand that clear this type of issue up nicely.
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#10 AVReidy  Icon User is offline

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Re: Proprietary software these days

Posted 14 August 2012 - 06:48 PM

...Glad I signed up for AP econ for senior year...

I still maintain that software is inherently disproportionately priced, though: complexity and resources that go into an application don't really determine the price at all, which is usually not the case to such a degree in the world of material goods.

@modi - I consider an operating system to be much more complex and high tech than a WordPress theme in that it is composed of millions of lines of efficient, low-level code as opposed to a few hundred in HTML, CSS, and PHP. theme : OS :: book : fighter jet

I guess it still comes down to consumer demand: people just expect a modern operating system to come with their PC, so they would probably not explicitly purchase an OS as an afterthought. And the few people who want WordPress themes are often willing to pay good money for them. Maybe all of this is a result of software lacking that 'supply' element - Microsoft doesn't really need to price its OS too high because they just write the code, get it ready for distribution, and watch the money flow in almost indefinitely.
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#11 Utael  Icon User is offline

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Re: Proprietary software these days

Posted 14 August 2012 - 10:29 PM

Actually the sell such a high volume they can charge less to recoup r&d where as PhotoShop and autocad are a niche with very few customers. They need to charge more to cover costs. Supply and demand doesn't work here as the supply is endless. It's the demand that sets the price but its inverse of standard economics. More people = lower price. Less people = higher price.
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#12 Skydiver  Icon User is offline

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Re: Proprietary software these days

Posted 15 August 2012 - 01:33 AM

View PostAVReidy, on 14 August 2012 - 06:48 PM, said:

@modi - I consider an operating system to be much more complex and high tech than a WordPress theme in that it is composed of millions of lines of efficient, low-level code as opposed to a few hundred in HTML, CSS, and PHP. theme : OS :: book : fighter jet


Ah, but you are forgetting the exorbitant number of dollars charged by the graphic designer so that some their color and font choices go into the theme. Would you price a Picasso, a Rembrandt, or a Da Vinci at the same rate as a your local handyman repainting your wall after he fixes the burst pipe behind it? People tend to pay for art, but grudgingly pay for utility.
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