How Much Does Source Code Cost? Range?

Question

I have taken a job selling a customized "online workplace management application."

Our clients' businesses work around the application. Our clients track their time (which is how they get paid), finances and work documents through the application we provide and give their clients access to their interests throught the application. Our clients range from 2 users to 500 users. Each user probably processes 200 files per year and generates a fee for each file in the range of $500-$2500 per file.

The application has been refined over a period of years and has cost around a million to develop.

Does anyone know what range something like this sells for (source code, add-ons such as support and hosting)? I am trying to wrap my head around it as my background is not in software development.

Answer 1

As chance would have it, Jeff wrote an article about software pricing just 2 days ago. It's mainly about merket segmentation, but you may want to do that as well. Perhaps even more interesting is Joel's piece that Jeff links to.

All in all, I'd say the gist is that there are no hard and fast rules. It all depends on your market. i.e. how much clients can pay, how much they're willing to pay, how many clients are there, and how unique your product is (or how it differs from competing products in features, quality and price).

Software pricing isn't really much different from pricing other products, except for two things:

• Per-unit (variable) cost is very low (for boxed versions) or zero (for internet distribution). This can make it extremely profitable when you manage to sell large volumes (Microsoft), but it also can make it hard to justify the price to customers when you have to spread the high fixed costs over a small volume (try selling custom software to small businesses).
• There often are competing products that cost nothing.