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 698/2498
13 Apr 2024 Lessons on Teamwork and Leadership from Chinese story book "Journey to the West" 164/1233
17 Mar 2026 How Much Does it Cost to Build an AI Agent in 2026 133/195
08 Oct 2024 Vietnam: The Rising Star in Global Outsourcing – Trends and Costs for 2025 131/492
02 Nov 2021 What is Terms of Reference (ToR)? 128/1696
05 Mar 2026 Top 7 Full-Cycle Web App Development Companies for Your Business in 2026 124/157
07 Jul 2024 Top Fintech Companies in Vietnam Driving Innovation Across Digital Banking & Investment 124/245
19 Oct 2021 Software development life cycles 119/797
18 Oct 2020 How to use the "Knowns" and "Unknowns" technique to manage assumptions 113/1205
13 Oct 2021 Outsourcing Software Development: MVP, Proof of Concept (POC) and Prototyping. Which is better? 112/586
10 Mar 2021 The 7 Biggest Mistakes to Avoid Before Outsourcing a Web Development Project 112/345
04 Oct 2021 Product Validation: The Key to Developing the Best Product Possible 109/417
12 May 2021 The Real Cost Between Outsourcing IT vs In-House: A Quick Comparison 109/552
11 Mar 2024 Why You Should Hire Odoo Developers from Vietnam to Customize Your ERP System 108/214
13 Dec 2020 Move fast, fail fast, fail-safe 106/433
02 Feb 2026 What Is the Total Cost of Web Development for Small & Medium Businesses? 106/139
17 Mar 2026 Top 10 Product Development Companies in Chennai 2026 (Updated) 106/122
05 Jan 2022 What Outsourcing Engagement Model is Right For You? 105/417
01 Jan 2023 Top Software Development Challenges in 2023 103/420
06 Feb 2026 How Much Does a CPA Cost for a Small Business? 101/120
10 Jan 2024 Facts Chart: Reasons for outsourcing 99/253
06 Feb 2021 Why fail fast and learn fast? 99/566
11 Jan 2024 What are the Benefits and Limitations of Augmented Intelligence? 98/579
21 Aug 2025 Top 30 Oldest IT Outsourcing Companies in Vietnam 96/199
11 Mar 2026 OEM, ODM, and OBM in Software Development: Choosing the Right Growth Path 96/113
31 Dec 2025 The Curse of Knowledge in Pre-Project Requirements 96/145
03 Jul 2022 What is the difference between Project Proposal and Software Requirements Specification (SRS) in software engineering? 95/1134
18 Sep 2025 Pilot Projects Explained: What They Are and How to Use Them Effectively 95/149
12 Aug 2024 Understanding Google Analytics in Mumbai: A Beginner's Guide 94/191
23 Jun 2024 Best Practices for Managing Project Escalations 94/297
01 Oct 2020 Fail fast, learn faster with Agile methodology 93/1162
19 Oct 2020 The hidden costs of outsourcing software development 93/561
12 Oct 2022 14 Common Reasons Software Projects Fail (And How To Avoid Them) 93/656
18 Aug 2022 What are the consequences of poor requirements with software development projects? 89/347
03 Apr 2022 Microsoft Solutions Framework (MSF) 88/1412
14 Mar 2024 Why should you opt for software localization from a professional agency? 87/226
07 Oct 2025 Case Study: Using the “Messaging House” Framework to Build a Digital Transformation Roadmap 87/166
16 Feb 2026 Education App Development Cost in 2026: Benchmarks and Key Cost Drivers 87/135
01 Mar 2022 Top 5 reasons why outsourcing to Vietnam is a smart move 86/370
21 Oct 2021 Advantages and Disadvantages of IT Outsourcing 85/440
16 Oct 2024 Building a Software Outsourcing Startup: Strategy Through Two Canvases 85/118
31 Aug 2022 What are the best practices for software contract negotiations? 84/351
09 Sep 2022 Close Collaboration and Communication Can Overcome the Challenges of Distributed Teams 83/287
24 Nov 2021 What is the Actual Cost of Hiring Cheap Developers? 83/476
23 Sep 2021 INFOGRAPHIC: Top 9 Software Outsourcing Mistakes 82/505
03 Jan 2023 Organizing your agile teams? Think about M.A.T (Mastery, Autonomy, Purpose) 82/475
05 Mar 2021 How do you minimize risks when you outsource software development? 81/413
12 Aug 2022 What is End-to-end project management? 80/569
01 Jan 2023 4 New IT Outsourcing Pricing Models to consider in 2023 79/450
02 May 2022 What Is RAID in Project Management? (With Pros and Cons) 79/915
01 Mar 2024 10 Project Management Myths 79/240
31 Oct 2025 The True ROI of Software Development Outsourcing for Tech Startups 77/155
03 Oct 2020 Outsourcing Your MVP Development - Streamlined Solutions for future 76/501
03 Dec 2025 IT Outsourcing Solutions Explained: What, How, Why, When 76/106
01 Oct 2024 23 Overlooked Types of Non-Functional Requirements You Shouldn’t Ignore 75/114
01 Jan 2023 Software Development Outsourcing Trends to Watch Out for in 2023 75/395
10 May 2021 What are things you should look for in a good IT outsourcing company? 74/518
05 Sep 2023 The Cold Start Problem: How to Start and Scale Network Effects 73/264
06 Mar 2024 [SemRush] What Are LSI Keywords & Why They Don‘t Matter 73/268
24 Nov 2025 Top Blockchain Companies in Vietnam 71/115
08 Oct 2022 KPI - The New Leadership 71/677
15 Oct 2022 Project-based team model for one-off and pilot software development projects 71/891
28 Dec 2021 8 types of pricing models in software development outsourcing 71/505
16 Dec 2021 Why outsource Python development of your project? 69/566
15 Aug 2021 TIGO Rate Formula - Things the partners should know 68/583
12 Jan 2023 Top 10 Trustworthy IT Outsourcing Companies in Vietnam 68/350
01 Apr 2021 IT Outsourcing to vietnam: Why It Is A Good Choice? 67/364
05 Aug 2025 Why Doesn’t South Korea Outsource Its IT Projects Like Other Developed Countries? 67/165
14 Oct 2021 Advantages and Disadvantages of Time and Material Contract (T&M) 67/949
13 Oct 2021 Why Outsourcing Software Development Services Is Gaining Traction With Non-Technical Leaders? 67/379
19 Mar 2021 Selective Outsourcing of IT Functions - a new trend in business outsourcing 67/621
14 Dec 2021 The Top 10 Problems with Outsourcing Implementation and How to Solve Them 66/462
28 Jul 2022 POC, Prototypes, Pilots and MVP: What Are the Differences? 66/797
03 Jan 2023 IT Outsourcing Costs: Is outsourcing really cost-effective? 65/273
22 May 2022 What are common mistakes that new or inexperienced managers make? 64/344
09 Jan 2021 How can outsourcing enable business agility? 64/254
18 Dec 2023 The Cone of Uncertainty in Scrum & Requirement Definition 63/790
10 Dec 2023 Pain points of User Acceptance Testing (UAT) 62/516
17 Jan 2024 What are the benefits and challenges of using multi-sourcing or single-sourcing strategies? 62/260
02 May 2021 Outsourcing Software Development: Avoid 8 Mistakes 62/198
07 Jul 2022 Managing Project Execution Terms 62/469
27 Jan 2020 Should a project manager push developers to work more hours due to mistakes of manager schedule setting? 62/501
17 Oct 2021 Does Fast Tracking increase project cost? 62/433
12 Dec 2021 Zero Sum Games Agile vs. Waterfall Project Management Methods 61/471
10 May 2021 Project Audit and Second Opinion Services 61/306
04 Apr 2024 Unlock Vietnamese-Japanese outsourcing potential 61/294
02 Nov 2022 Difference between Change Management and Project Management 61/292
01 Jan 2023 Top 5 IT outsourcing countries in 2023 60/334
09 May 2022 Build one to throw away vs Second-system effect: What are differences? 60/371
01 Sep 2019 Outsourcing Software To Vietnam: Facts, benefits and limitations 60/520
03 Nov 2022 Top questions and answers you must know before ask for software outsourcing 59/344
03 Nov 2021 7 phases of Odoo Implementation and Development: Can they be outsourced? 59/478
10 Apr 2024 The Parking Lot Method: Unlocking a Simple Secret to Supercharge Your Productivity 59/568
01 Jun 2025 10 Sustainable & Unique IT Outsourcing Companies in Vietnam 58/139
12 Oct 2021 Vietnam outsourcing path - the silk road connecting ASEAN with the developed countries (EU, US, Japan...) 58/390
19 Apr 2021 7 Most Common Time-Wasters For Software Development 57/602
14 Jun 2022 Example and Excel template of a RACI chart in Software Development 57/921
01 May 2024 Warren Buffett’s Golden Rule for Digital Transformation: Avoiding Tech Overload 57/264
01 Dec 2023 Laws of Project Management 57/371
04 Oct 2022 Which ERP implementation strategy is right for your business? 56/409
18 Jul 2021 How To Ramp Up An Offshore Software Development Team Quickly 56/645
17 Oct 2020 How Outsourcing can Improve Time Management for Better Business 55/340
13 Jan 2023 What are the Hourly Rates in Offshore Software Development? 55/292
04 Jan 2021 VIETNAM AS A BIG ATTRACTIVE DESTINATION IN THE FIELD OF OUTSOURCING 54/373
01 Jan 2024 Hiring Tech Talents in Asia: An Overview of Skills, Costs, and Potential 54/213
19 Oct 2021 Is gold plating good or bad in project management? 54/885
28 Oct 2022 Expect the unexpected in 2023 - How Outsourcing Can Help? 53/257
18 Oct 2021 Key Elements to Ramping Up a Large Team 53/1302
01 Oct 2022 Vietnam is a favorite supply of IT outsourcing services to Japan 53/288
10 Nov 2022 Poor Code Indicators and How to Improve Your Code? 53/270
07 Dec 2023 12 project management myths to avoid 53/245
01 Jan 2024 Tech Partnerships: Choosing the Right Software Outsourcing Firm in Vietnam 52/223
22 Mar 2022 8 Mistakes Marketing Agencies or Consulting Firms Make When Outsourcing Web Development 52/397
08 Aug 2021 Why Nearshore Software Development is better than In-House Development? 51/245
24 Nov 2023 The project management paradox: Achieving MORE by doing LESS 51/281
05 Jan 2024 Easy ASANA tips & tricks for you and your team 51/248
18 Feb 2026 "Hit and Run" Project Management: Balancing Speed with Sustainability 51/70
15 Nov 2023 IT Staff Augmentation Types and the Best Choice for Your Business 50/257
11 Mar 2023 Common Pain Points in Software Development Outsourcing 50/313
07 Nov 2024 Outsourcing Crisis Looming: Will Trump's Policies Transform the Global IT Landscape? 50/232
02 Jun 2024 Reviving Ancient Wisdom: The Spiritual Side of Project Management 50/302
12 Mar 2024 How do you create FOMO in software prospects? 50/218
20 Jul 2022 Software Myths and Realities 50/983
31 Oct 2021 Tips to Fail Fast With Outsourcing 50/438
28 Oct 2022 Build Operate Transfer (B.O.T) Model in Software Outsourcing 49/452
21 Aug 2022 Forbes: IT Outsourcing Hotspot: Vietnam, A Small But Mighty Powerhouse 49/303
01 Jan 2024 12 reasons for software development outsourcing 49/236
01 Mar 2023 Bug Prioritization - What are the 5 levels of priority? 49/275
01 May 2023 Streamline Your Business with Outsourcing 49/252
02 Nov 2023 What are the pros and cons of iIT outsourcing? 48/248
06 Jun 2022 Change Management at the Project Level 48/353
06 Oct 2021 Intellectual property issues with outsourcing software development 48/433
02 Mar 2021 Estimate the Cost of Software Development 48/409
01 Jan 2024 Software Outsourcing Questions for 2024 47/196
26 Sep 2024 Successful Project Management Techniques You Need to Look Out For 47/443
15 May 2022 20 Common Mistakes Made by New or Inexperienced Project Managers 47/329
02 Dec 2021 3 Ways to Avoid Scope Creep in IT Consulting 47/256
13 Jan 2020 Quiz: Test your understanding project cost management 46/683
01 Aug 2022 Is planning "set it and forget it" or "set it and check it"? 46/333
05 Jun 2023 Fractional, Part-Time (virtual) or Interim CTO: Who Will Cover Your Business Needs? 46/188
01 Jan 2023 Why is Vietnam the Top IT Outsourcing Destination of 2023? 44/283
16 Mar 2021 Outsource Data Engineering Services - TIGO Streamlined Solutions 44/299
17 Feb 2022 Prioritizing Software Requirements with Kano Analysis 42/346
25 Sep 2025 A Practical Guide to Secure Online Work for Outsourced Teams 42/136
30 Nov 2023 Project Managers, Focus on Outcomes — Not Deliverables 41/202
26 Dec 2023 Improving Meeting Effectiveness Through the Six Thinking Hats 41/312
01 Jan 2024 What The World Is Flat Means to IT Outsourcing 41/208
25 Nov 2021 Low-Cost Software Development: Buy Nice or Buy Twice? 41/399
31 Dec 2021 Outsourcing Software Development to mitigate the impact of COVID-19 41/364
08 Feb 2022 Software Development: Fixed Cost or Opportunity Cost? 40/501
01 Feb 2023 [InfoWorld] Is your outsourcer agile enough? 39/231
21 Oct 2022 Outsourcing Billable Rate 38/303
08 Jan 2024 Outsourcing on an As-Needed Basis 34/196
10 May 2022 Levels of Teamwork 34/228
06 Nov 2019 How to Access Software Project Size? 33/290
21 Jun 2024 Dead Horses and the Escalation of Commitment 33/170

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}