Pricing Strategy for point of sale system

Discussion in 'Growing and Managing a Business' started by blasto333, Feb 12, 2013.

  1. blasto333

    blasto333
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    I have an online point of sale application called php point of sale. I sell it in 2 formats:

    1. Download version which a user configures and installs on there own web server or computer
    2. Cloud/Hosted version where the user runs the system from our server.

    Before my pricing strategy was $99.00 for 1 year of access to updates for download and $29.00 / month for hosted solution (14 day trial).

    I was getting about 80% download and 20% hosted. My goal is to get more hosted customers as I make more money this way and it is a better experience for the end user.

    I have decided to raise my download price to $249.00 for 1 year of updates. This brings the pricing more in line with the cost of the hosted solution.

    Do you think this is a good pricing strategy?
     
  2. Joseph.Shivell

    Joseph.Shivell
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    I think you would be "shooting yourself in the foot" if you increase the download price that much. The reason you are getting 80% download is because the price for monthly access is almost four times as much - to increase the price of the download would be like saying, "no one's buying the monthly hosted solution, so I think I'll increase the price of the download so no one will buy that either". If your costs allow you to do so, you'd be better off reducing the price of the hosted solution to bring it closer to the download price, but high enough to allow for the increased service your clients would get with a hosted solution.
     
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  3. Rocky

    Rocky
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    What are your profit margins for both of the solutions? Simply raising the price for your product just to divert sales to your other product is not a good idea. It may backfire and your sales might go down completely.

    Why would you want to align the sales of both your solutions? The reason hosted solutions have less takers is because of its high price so raising the price of the alternative won't work. Instead it could reduce the sale of download solution as well.

    Another reason for low take ups on the hosted version might be due to its very own nature. Since it remains hosted with you the user might not want it and may prefer the downloaded version which gives more control. So instead of increasing prices for the download version you should think about reducing the price of the hosted version to increase sign ups.
     
  4. blasto333

    blasto333
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    I have decided to keep the price at $99.00 as I tried $249.00 for 4 days and only got 1 sale. I think the solutions are for 2 different types of people. The download is for the technically inclined or people not comfortable with cloud.

    Hosted/cloud is for someone who wants to have a very easy turn key operation. I think as I add more features I can slowly increase the download price and the hosted solution will get premium features such as unlimited stores, where download would cost me for multiple stores.

    Does this make sense?
     
  5. bluesky98

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    blasto333,

    I think that makes sense.

    But, I am wondering if there is a way to get a 3rd option that includes both the download and a smaller monthly subscription fee? If you could have some sort of add-on or feature that requires monthly payments, then you can capture a subscription from the people that are just doing the 1x purchase. Even a smaller stream of income will be helpful for you (after all, what is a river, but a collection of streams).

    You know your product and technology better than I do...was just hoping to give you food for thought.
     
  6. blasto333

    blasto333
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    I already have already added such a product recently. If a customer decides to do credit card processing, I make money based on their volume. This applies to download and hosted customers.

    Do you think slowly raising the price of the download solution as I add more features makes sense? For example: I plan to add multi-store capabilities and am thinking of raising the price to $149 for 1st store and $99.00 per additional store and for the hosting $29.00 for 1st store and $19.00 for additional store.

    I don't want to go much lower for hosting as I am already way lower than competitors.
     
  7. bluesky98

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    It makes sense, but the key would be to make sure there is truly a value for the extra you are asking. But you have to be careful not to alienate your customer base. If you customers are coming to you solely because of pricing, you will be scaring them away. If they are coming to you for the product, then you can definitely adjust the price, especially if it keeps you in line with your competitors. But, make sure that if you pricing is on par with your competitors, your product/services should be equal to or better than them.

    My knee-jerk reaction to the new price..it doesn't seem outrages. If I were shopping for this product (and I was more familiar with it), I would compare to other competitors and choose the one that gives me the most value for money. The last time I looked for POS software (including hardware) was like 10 years ago...and prices had a whole lot more zeroes on the end.
     

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