Four Keys to Fair Software Pricing

Published on: June 19, 2024
Last updated: June 21, 2024 Read in fullscreen view

Recommended for you

01 Aug 2024 The Standish Group report 83.9% of IT projects partially or completely fail 438/2207
13 Apr 2024 Lessons on Teamwork and Leadership from Chinese story book "Journey to the West" 112/1158
07 Jul 2024 Top Fintech Companies in Vietnam Driving Innovation Across Digital Banking & Investment 92/185
02 Nov 2021 What is Terms of Reference (ToR)? 77/1630
17 Mar 2026 How Much Does it Cost to Build an AI Agent in 2026 72/119
19 Oct 2021 Software development life cycles 66/740
18 Oct 2020 How to use the "Knowns" and "Unknowns" technique to manage assumptions 66/1144
05 Mar 2026 Top 7 Full-Cycle Web App Development Companies for Your Business in 2026 60/71
17 Mar 2026 Top 10 Product Development Companies in Chennai 2026 (Updated) 58/65
08 Oct 2024 Vietnam: The Rising Star in Global Outsourcing – Trends and Costs for 2025 58/411
21 Aug 2025 Top 30 Oldest IT Outsourcing Companies in Vietnam 58/161
03 Apr 2022 Microsoft Solutions Framework (MSF) 57/1345
18 Sep 2025 Pilot Projects Explained: What They Are and How to Use Them Effectively 56/106
06 Feb 2026 How Much Does a CPA Cost for a Small Business? 55/64
02 Feb 2026 What Is the Total Cost of Web Development for Small & Medium Businesses? 54/74
13 Oct 2021 Outsourcing Software Development: MVP, Proof of Concept (POC) and Prototyping. Which is better? 54/513
31 Aug 2022 What are the best practices for software contract negotiations? 52/308
12 May 2021 The Real Cost Between Outsourcing IT vs In-House: A Quick Comparison 51/486
31 Dec 2025 The Curse of Knowledge in Pre-Project Requirements 51/81
11 Mar 2026 OEM, ODM, and OBM in Software Development: Choosing the Right Growth Path 51/58
12 Oct 2022 14 Common Reasons Software Projects Fail (And How To Avoid Them) 50/603
11 Mar 2024 Why You Should Hire Odoo Developers from Vietnam to Customize Your ERP System 49/153
24 Nov 2025 Top Blockchain Companies in Vietnam 49/92
01 Oct 2020 Fail fast, learn faster with Agile methodology 46/1087
13 Dec 2020 Move fast, fail fast, fail-safe 46/356
06 Feb 2021 Why fail fast and learn fast? 46/501
09 Sep 2022 Close Collaboration and Communication Can Overcome the Challenges of Distributed Teams 46/244
05 Jan 2022 What Outsourcing Engagement Model is Right For You? 43/353
03 Jul 2022 What is the difference between Project Proposal and Software Requirements Specification (SRS) in software engineering? 43/1060
03 Oct 2020 Outsourcing Your MVP Development - Streamlined Solutions for future 42/463
14 Oct 2021 Advantages and Disadvantages of Time and Material Contract (T&M) 41/907
15 Oct 2022 Project-based team model for one-off and pilot software development projects 39/846
21 Oct 2021 Advantages and Disadvantages of IT Outsourcing 39/387
24 Nov 2021 What is the Actual Cost of Hiring Cheap Developers? 39/423
12 Dec 2021 Zero Sum Games Agile vs. Waterfall Project Management Methods 39/446
03 Jan 2023 Organizing your agile teams? Think about M.A.T (Mastery, Autonomy, Purpose) 38/417
12 Aug 2022 What is End-to-end project management? 38/491
04 Apr 2024 Unlock Vietnamese-Japanese outsourcing potential 38/267
05 Aug 2025 Why Doesn’t South Korea Outsource Its IT Projects Like Other Developed Countries? 37/130
18 Dec 2023 The Cone of Uncertainty in Scrum & Requirement Definition 36/740
18 Aug 2022 What are the consequences of poor requirements with software development projects? 36/293
19 Oct 2020 The hidden costs of outsourcing software development 35/489
01 Jan 2023 4 New IT Outsourcing Pricing Models to consider in 2023 35/397
02 May 2022 What Is RAID in Project Management? (With Pros and Cons) 35/856
07 Oct 2025 Case Study: Using the “Messaging House” Framework to Build a Digital Transformation Roadmap 34/106
01 Oct 2024 23 Overlooked Types of Non-Functional Requirements You Shouldn’t Ignore 34/68
05 Sep 2023 The Cold Start Problem: How to Start and Scale Network Effects 34/223
23 Jun 2024 Best Practices for Managing Project Escalations 34/235
07 Jul 2022 Managing Project Execution Terms 34/440
04 Oct 2021 Product Validation: The Key to Developing the Best Product Possible 33/336
08 Oct 2022 KPI - The New Leadership 33/627
01 Mar 2022 Top 5 reasons why outsourcing to Vietnam is a smart move 33/312
31 Oct 2025 The True ROI of Software Development Outsourcing for Tech Startups 32/107
19 Mar 2021 Selective Outsourcing of IT Functions - a new trend in business outsourcing 32/574
28 Oct 2022 Expect the unexpected in 2023 - How Outsourcing Can Help? 32/232
03 Nov 2022 Top questions and answers you must know before ask for software outsourcing 32/314
16 Dec 2021 Why outsource Python development of your project? 31/515
28 Jul 2022 POC, Prototypes, Pilots and MVP: What Are the Differences? 31/745
10 Apr 2024 The Parking Lot Method: Unlocking a Simple Secret to Supercharge Your Productivity 31/517
01 Mar 2023 Bug Prioritization - What are the 5 levels of priority? 31/251
03 Jan 2023 IT Outsourcing Costs: Is outsourcing really cost-effective? 31/236
03 Dec 2025 IT Outsourcing Solutions Explained: What, How, Why, When 31/56
16 Oct 2024 Building a Software Outsourcing Startup: Strategy Through Two Canvases 31/63
05 Jan 2024 Easy ASANA tips & tricks for you and your team 30/225
28 Dec 2021 8 types of pricing models in software development outsourcing 30/463
04 Oct 2022 Which ERP implementation strategy is right for your business? 29/347
12 Jan 2023 Top 10 Trustworthy IT Outsourcing Companies in Vietnam 29/307
01 Sep 2019 Outsourcing Software To Vietnam: Facts, benefits and limitations 29/476
22 Mar 2022 8 Mistakes Marketing Agencies or Consulting Firms Make When Outsourcing Web Development 29/368
11 Mar 2023 Common Pain Points in Software Development Outsourcing 29/281
07 Nov 2024 Outsourcing Crisis Looming: Will Trump's Policies Transform the Global IT Landscape? 29/199
01 Jun 2025 10 Sustainable & Unique IT Outsourcing Companies in Vietnam 29/105
10 Dec 2023 Pain points of User Acceptance Testing (UAT) 28/478
10 Nov 2022 Poor Code Indicators and How to Improve Your Code? 28/244
28 Oct 2022 Build Operate Transfer (B.O.T) Model in Software Outsourcing 28/424
15 Aug 2021 TIGO Rate Formula - Things the partners should know 28/518
05 Mar 2021 How do you minimize risks when you outsource software development? 28/349
18 Oct 2021 Key Elements to Ramping Up a Large Team 27/1246
09 Jan 2021 How can outsourcing enable business agility? 27/216
23 Sep 2021 INFOGRAPHIC: Top 9 Software Outsourcing Mistakes 27/449
10 May 2021 What are things you should look for in a good IT outsourcing company? 27/457
02 Nov 2022 Difference between Change Management and Project Management 27/255
02 Mar 2021 Estimate the Cost of Software Development 27/362
26 Sep 2024 Successful Project Management Techniques You Need to Look Out For 27/417
03 Nov 2021 7 phases of Odoo Implementation and Development: Can they be outsourced? 27/434
05 Jun 2023 Fractional, Part-Time (virtual) or Interim CTO: Who Will Cover Your Business Needs? 26/162
24 Nov 2023 The project management paradox: Achieving MORE by doing LESS 26/245
14 Dec 2021 The Top 10 Problems with Outsourcing Implementation and How to Solve Them 26/419
01 Oct 2022 Vietnam is a favorite supply of IT outsourcing services to Japan 26/260
13 Oct 2021 Why Outsourcing Software Development Services Is Gaining Traction With Non-Technical Leaders? 26/336
18 Feb 2026 "Hit and Run" Project Management: Balancing Speed with Sustainability 26/39
18 Jul 2021 How To Ramp Up An Offshore Software Development Team Quickly 25/609
22 May 2022 What are common mistakes that new or inexperienced managers make? 25/302
01 Jan 2023 Why is Vietnam the Top IT Outsourcing Destination of 2023? 25/260
01 Dec 2023 Laws of Project Management 25/332
11 Jan 2024 What are the Benefits and Limitations of Augmented Intelligence? 25/498
06 Jun 2022 Change Management at the Project Level 25/329
01 Jan 2024 Software Outsourcing Questions for 2024 25/174
01 Jan 2023 Software Development Outsourcing Trends to Watch Out for in 2023 24/340
04 Jan 2021 VIETNAM AS A BIG ATTRACTIVE DESTINATION IN THE FIELD OF OUTSOURCING 24/333
16 Feb 2026 Education App Development Cost in 2026: Benchmarks and Key Cost Drivers 24/55
09 May 2022 Build one to throw away vs Second-system effect: What are differences? 23/333
20 Jul 2022 Software Myths and Realities 23/934
02 Dec 2021 3 Ways to Avoid Scope Creep in IT Consulting 23/228
10 May 2021 Project Audit and Second Opinion Services 23/267
13 Jan 2020 Quiz: Test your understanding project cost management 23/636
19 Oct 2021 Is gold plating good or bad in project management? 22/843
17 Oct 2021 Does Fast Tracking increase project cost? 22/388
19 Apr 2021 7 Most Common Time-Wasters For Software Development 22/564
17 Feb 2022 Prioritizing Software Requirements with Kano Analysis 22/325
02 May 2021 Outsourcing Software Development: Avoid 8 Mistakes 22/128
13 Jan 2023 What are the Hourly Rates in Offshore Software Development? 22/257
01 Jan 2023 Top 5 IT outsourcing countries in 2023 22/290
01 Jan 2024 12 reasons for software development outsourcing 22/195
07 Dec 2023 12 project management myths to avoid 22/210
06 Oct 2021 Intellectual property issues with outsourcing software development 22/403
06 Mar 2024 [SemRush] What Are LSI Keywords & Why They Don‘t Matter 22/203
12 Mar 2024 How do you create FOMO in software prospects? 22/187
01 Jan 2024 Tech Partnerships: Choosing the Right Software Outsourcing Firm in Vietnam 21/192
25 Sep 2025 A Practical Guide to Secure Online Work for Outsourced Teams 21/109
01 Feb 2023 [InfoWorld] Is your outsourcer agile enough? 21/213
01 May 2023 Streamline Your Business with Outsourcing 21/216
01 Apr 2021 IT Outsourcing to vietnam: Why It Is A Good Choice? 21/314
21 Aug 2022 Forbes: IT Outsourcing Hotspot: Vietnam, A Small But Mighty Powerhouse 21/273
25 Nov 2021 Low-Cost Software Development: Buy Nice or Buy Twice? 21/360
08 Aug 2021 Why Nearshore Software Development is better than In-House Development? 20/211
14 Jun 2022 Example and Excel template of a RACI chart in Software Development 20/855
17 Oct 2020 How Outsourcing can Improve Time Management for Better Business 20/290
27 Jan 2020 Should a project manager push developers to work more hours due to mistakes of manager schedule setting? 20/449
16 Mar 2021 Outsource Data Engineering Services - TIGO Streamlined Solutions 20/267
15 Nov 2023 IT Staff Augmentation Types and the Best Choice for Your Business 20/211
01 Jan 2023 Top Software Development Challenges in 2023 20/325
26 Dec 2023 Improving Meeting Effectiveness Through the Six Thinking Hats 20/277
01 Mar 2024 10 Project Management Myths 19/163
01 Aug 2022 Is planning "set it and forget it" or "set it and check it"? 19/301
31 Oct 2021 Tips to Fail Fast With Outsourcing 19/404
08 Feb 2022 Software Development: Fixed Cost or Opportunity Cost? 18/478
10 Jan 2024 Facts Chart: Reasons for outsourcing 18/168
30 Nov 2023 Project Managers, Focus on Outcomes — Not Deliverables 18/176
12 Aug 2024 Understanding Google Analytics in Mumbai: A Beginner's Guide 17/110
10 Mar 2021 The 7 Biggest Mistakes to Avoid Before Outsourcing a Web Development Project 17/249
17 Jan 2024 What are the benefits and challenges of using multi-sourcing or single-sourcing strategies? 16/205
14 Mar 2024 Why should you opt for software localization from a professional agency? 16/152
01 Jan 2024 Hiring Tech Talents in Asia: An Overview of Skills, Costs, and Potential 16/174
01 May 2024 Warren Buffett’s Golden Rule for Digital Transformation: Avoiding Tech Overload 16/220
02 Nov 2023 What are the pros and cons of iIT outsourcing? 16/203
08 Jan 2024 Outsourcing on an As-Needed Basis 15/173
02 Jun 2024 Reviving Ancient Wisdom: The Spiritual Side of Project Management 15/249
06 Nov 2019 How to Access Software Project Size? 15/261
12 Oct 2021 Vietnam outsourcing path - the silk road connecting ASEAN with the developed countries (EU, US, Japan...) 15/314
21 Oct 2022 Outsourcing Billable Rate 14/278
01 Jan 2024 What The World Is Flat Means to IT Outsourcing 13/179
15 May 2022 20 Common Mistakes Made by New or Inexperienced Project Managers 11/292
21 Jun 2024 Dead Horses and the Escalation of Commitment 10/147
10 May 2022 Levels of Teamwork 9/202
31 Dec 2021 Outsourcing Software Development to mitigate the impact of COVID-19 6/325

IMHO, too many vendors complicate software pricing. Rather than providing a clear, fair price for their customers, software vendors often charge different prices for different hardware configurations, make customers pay for modules they don’t need, and surprise customers with hidden fees when they make even the tiniest change to their hardware platform.

If I could talk collectively to the IBM software industry, here’s the advice I’d give on the ideal way to price software products for both the vendor’s and the customer’s own good. And for customers, look for these items in any IBM isoftware packages you purchase to get a better deal before you buy.

Provide straight-forward, flat pricing with no haggling

Set a fair price that covers development costs, technical support, and other associated costs, along with profit. Then charge everyone that same price.

Don’t punish customers running more powerful machines by setting pricing at different tier levels or charging one price when they’re using four processors and another price when they’re using five processors. Don’t charge more based on the number of output queues, the number of users, or any other arbitrary measurement. And don’t haggle with your customers. When you give a great deal to one customer, you’re relying on other customers making up that revenue through a higher price. Don’t play favorites.

Software pricing should be fair, consistent, and affordable. If the customer truly sees the ROI in your software, you shouldn’t have a problem selling it.

Freeze software maintenance when a customer purchases your software

Many companies tack on yearly software maintenance increases so that over time, their customers’ yearly maintenance cost approaches what the customer originally paid for the software. This practice serves as a retroactive price hike.

Fix your customer’s annual maintenance costs when they purchase your software, and keep it at that price as long as they keep their maintenance active.

I also think software companies shouldn’t charge maintenance for the first year after a customer buys the product. The first year’s maintenance should be included in the purchase price.

Make it easy for customers to upgrade their hardware

Don’t charge license transfer fees when the customer upgrades their machine. Hardware upgrades shouldn’t be revenue events.

There’s no reason to collect a check when the customer moves your software from a Power 7 to a Power 8 machine or when they activate another processor. IBM software doesn’t take any special tweaking to run the same package on different processors, and new software keys are easy to produce.

Updated software keys should come with a smile, not an invoice. Software should be transferable when the customer changes machines.

Don’t make your customers pay for capabilities they don’t need

Make your software as modular as possible so customers can select and purchase only the capabilities they need. This gives them more freedom in what they buy. Modular software also provides an opportunity later on to make add-on purchases by buying additional modules.

In my experience, these are some of the better techniques for pricing software. I use them in my own software pricing and they work well for us and for our customers. If you’re a vendor, I encourage you to try these techniques out. If you’re a customer, I believe you’re better off buying from companies that believe in these principles.

A A A A

[{"displaySettingInfo":"[{\"isFullLayout\":false,\"layoutWidthRatio\":\"\",\"showBlogMetadata\":true,\"includeSuggestedAndRelatedBlogs\":true,\"enableLazyLoad\":true,\"quoteStyle\":\"1\",\"bigHeadingFontStyle\":\"1\",\"postPictureFrameStyle\":\"1\",\"isFaqLayout\":false,\"isIncludedCaption\":false,\"faqLayoutTheme\":\"1\",\"isSliderLayout\":false}]"},{"articleSourceInfo":"[{\"sourceName\":\"Richard Voss (DRVTech)\",\"sourceValue\":\"https://www.drvtech.com/\"}]"},{"privacyInfo":"[{\"isOutsideVietnam\":false}]"},{"tocInfo":"[{\"isEnabledTOC\":true,\"isAutoNumbering\":true,\"isShowKeyHeadingWithIcon\":false}]"}]

Via

{content}