Pricing is always a difficult decision. Often a price that is too low makes people perceive your program as being inconsequential and not worth the trouble of purchasing (for you or them). On the other hand, a price set too high can also be negative for your rate of payments. Generally, a good way to judge what you should charge is to evaluate what programs like yours are selling for. However, that is only a starting point ...
There are several other variables involved with pricing. Generally, individual customers are more price sensitive than business customers (within reason, of course). If you have a tool that can save an organization time or otherwise make them more efficient, you could probably charge $98 just as easy as $48 (that' just an example -- your own program may be worth more or less). The key thing to note is that with a business of any size at all, either price is likely inconsequential to their budget. If the difference between your program and one like it is in the neighborhood of $10-$100 and one has to spend several more hours downloading, installing, entering data, and generally learning to use a program, they've probably lost money worrying about such an inconsequential price difference. Granted, some people in businesses probably shop around for equivalent programs: try a lot of them, then, if all things are the same (same features and general ease-of-use), they go for the lower-priced item (though that might not even be true because some people sort of feel they "get what they pay for" in a psychological sense and may even perceive a higher-priced item as being better). However, I think most busy people will try a program and if it fits their needs and has a reasonable price, they'll buy it and get back to business. If that's true, an important thing is to offer all the features they want, and try to get them to evaluate your product first -- and a lot of business products may actually be underpriced. If you have the choice of lowering the price or adding features to generate more income, the later would probably be better (though admittedly harder) if other things are equal.
One of our popular products uses a 2-license type of strategy that works well for us. Nothing else is different (same features, etc.). It is sort of like the programs that permit people to use it free for personal (home) use, but we are not that generous <g>. Here are the two licenses offered:
Personal Use License - may only be used by an individual not using the program for a business, academic, or government purpose. That is, you only intend to use it at home for private use. Your unlock code and license will be assigned to a private person. (it is priced at $45/lic - limit two, no quantity discounts)
Professional Use License - the program will be used for professional use (such as in a business, academic, or government environment). The unlock code will be assigned to the organization name provided at the time of purchase and will reflect the total number of licenses purchased. (This type of license is $98/lic with a decent discount if more are purchased.)
However, unlike business programs, that strategy would probably not work well with games, small utilities or other types of products. As noted before, those types of products used at home are probably more subject to price-sensitivity by individuals spending their own money and who are not as concerned about the "time is money" issue. People may even filter out higher priced items and only download ones that have a lower price. I say this because on our web site (http://www.nstarsolutions.com/products) we used to not list the price of the programs (we list hundreds of products spanning a large range of software for our clients) and if we ever got a question like "what is the price", it almost always was for the non-business programs.
Regardless of the type of program, please note that while it is easy to lower the price (no one ever complains to find the price will be less than what they expected to pay), increasing prices can be difficult if you have not taken precautions. One way around that is to make sure you have clear documentation about the terms of your prices and where one may find the latest (possibly more expensive) version of your program. This may not avoid all the problems with raising your price, but it will help greatly -- especially if you think ahead and consider that later versions of a program you have now may be worth more. Be sure to see the Distribution and Pricing Dilemma discussion).
Another trap some shareware authors fall into is making their pricing scheme too complicated. I have seen some try to break out shipping fees by country rather than general terms (domestic or overseas). If people are already trying to decide between, for example, a Lite Version and Pro Version, whether they want a disk, a disk with the unlock code, just the unlock code, etc., the whole process can get a bit messy. In fact, marketing studies suggest that too many options can deter customers from buying something at all -- they get confused, put off ordering as a result, and possibly never order. What I recommend is that you find a happy medium with your pricing and definitely keep it as simple as possible while trying to cover costs. [I have also seen some people suggest that you should do more than just cover costs for shipping, but I am not convinced of that. The reason is, while you can build a profit margin into the actual price of the product and customers will not necessarily know how much profit you are making on the base price, if you try to do that on a cost known to the customer (and many customers likely have a pretty good idea of the cost of materials, postage, and the small amount of labor involved with shipping), you could be giving the customer reason to question your pricing scheme -- and the last thing you want to do is give them reason to start a negotiation about your prices since some tend to think that dealing with a small shareware business gives them the right to so easily haggle over prices with you anyway. Thus, customers that know, for example, that it will probably cost you $5 to prepare a diskette, affix a label, stick it in a diskette mailer, affix postage, and send it to them, will likely resent any shipping fees you quote which are much higher than that. I believe this is why so many mail-order companies will have free shipping: it is not that they are giving you the shipping absolutely free; but, rather, they just recognize that shipping is not where they are going to make their profit and they just have the shipping built into the price where it is not a known variable to the customer and, therefore, it is much less noticeable. Of course, it is one of those psychological issues where the customer may think they are getting something free and then it builds goodwill between the business and customer.]
Back to the discussion of keeping shipping fees fairly constant, if you live in the U.S. you may want to cover your costs for shipping outside the U.S., either take the difference of the cost to U.S. vs overseas and just have one shipping price, or at the very least do not try to have one price for people that live in Australia and another price for people that live in Asia. While people can at least understand that you have higher costs to ship outside your country, if you start breaking it out too much, you may give the perception that you are penalizing someone because they live (or do not live) in a certain place. Of course a better way would be to just average the shipping no matter where it is sent. If you are a U.S.-based shareware author, chances are extremely good most of your orders will come from the U.S. anyway and so to add a complicated shipping scheme is just unnecessary.
The same issue applies to sales tax. If you ship a physical product and, therefore, may be subject to collecting sales tax if an order is taken from a certain region (usually your own state), then it may just be easier to absorb the 5% or so sales tax on that occasion and not have to add wording about if you live in XX, please be sure to compute and add x% for sales tax to your order. Note: you should consult with your local tax professional, but I have seen where sales tax is not necessary if you are not shipping a physical product -- such as when all you do is provide an unlock code for something that has been downloaded from who knows where. The basis behind this is that you are selling intellectual property rather than physical property and while the later is taxed, the former is not. Also, as I understand, Internet sales tax in general is currently up for debate in various places to include the halls of Congress -- but so far they have not passed any legislation to make Internet commerce taxable and have specifically said that Internet commerce is not taxable. Of course, as mentioned before, be sure to consult with a good tax professional about all of this. The amount of sales tax for orders that happen to be collected in your own region/state is not likely worth avoiding if you are going to risk a problem with the IRS (or whatever agency your country has) later: you will definitely want to keep your business legal and stay on top of any taxes you owe. See the various topics under Run Your Shareware Business Like a Business for more discussion about running your shareware business professionally.
