Last week I was getting some blue screen errors. A hardware diagnostics test reported that my hard drive had a couple of bad sectors. I bought a new hard drive and set about installing all of my programs. Wow, I have a lot of applications installed.
One of the application is X1; a desktop/email search application. I’m a big fan of X1. I’m not such a fan of the process of reinstalling X1, but that’s another story. When I went to get the client app from their website, I was informed that my license covered version 6.0, while the current version is 6.6. This seemed odd to me as usually minor revision (the number to the right of the decimal) are free upgrades and major versions (the number to the left) you have to pay for. But that’s not the way X1 works. With X1, I pay $50 for the client app and one year of upgrades. Whatever upgrades are available in that year, I get. After that year is over, I have to pay another $50 for another year of upgrades.
Quickbooks, for example, can cost $10,000 plus about $1,000 per year if you want to stay current. X1 is a little different, however. I don’t have to upgrade. They don’t seem to have any hook that forces me to upgrade. But if I ever feel the need to, I can upgrade and continue to do so for a year. Another difference is that the X1 “maintenance fee” is the same cost as a brand new license. Most maintenance arrangements are considerably less that the initial outlay.
My interest is how this relates to Excel add-ins. Let’s use Power Utility Pak as an example. It’s a pretty successful add-in that’s sold for actual money. If I pay for PUP v6, I get a perpetual license – that means it lasts forever. I don’t get upgrades, but presumably I can upgrade the version for a discounted price (couldn’t verify that in a quick glance of the product site). Bug fixes and the like are free.
If I buy PUP, I’m good for as long as it works with my current version of Excel. If I bought whatever PUP was selling for Excel 97, it probably still worked just fine in 2003. If I buy the PUP for 2007, it will probably be good for another 10 year.
So what’s better: $40 add-in plus a discounted upgrade fee. Or $40 add-in plus a year of upgrades and if you want another year of upgrades it’s another $40. Oh, and I’m not asking what’s best for the buyer. I’m asking what’s best for the developer. Although the right answer is probably best for both.
I think one of the downsides of the X1 model is the unpredictable schedule of major upgrades. If I buy it now and they release 7.0 in June, I’m getting two versions for the price of one. If they release 7.0 in January 2011, I’m hosed. What then if they release 8.0 in March 2011? It seems unfair and the perception of unfair is bad for business. Should they maintain a consistent upgrade schedule? If they do, does that force them to add features when they probably shouldn’t?
In related news, I read Don’t Just Roll the Dice. It has some basic software pricing guidance in there. Nothing Earth-shattering, but a good read if you’re not familiar with the subject or you just need a refresher.