Joel on Software - On the Pricing of Software - Fortune

Joel on Software - On the Pricing of Software

Bad Idea #1: Site Licenses.

The opposite of segmentation, really. I have certain competitors that do this: they charge small customers per-user but then there’s a “unlimited” license at a fixed price. This is nutty, because you’re giving the biggest price break precisely to the largest customers, the ones who would be willing to pay you the most money. Do you really want IBM to buy your software for their 400,000 employees and pay you $2000? Hmm?

As soon as you have an “unlimited” price, you are instantly giving a gigantic gift of consumer surplus to the least price-sensitive customers who should have been the cash cows of your business.

Author Joel Spolsky
Work Camels and Rubber Duckies