4 ms·

Unfortunately, I think “it depends”. What is your real product, the hardware or the software? How expensive is the hardware? Is it a mass market product or a hi

Unfortunately, I think “it depends”. What is your real product, the hardware or the software? How expensive is the hardware? Is it a mass market product or a high end, low numbers thing? How good is your software?

throwawayprice 8y ago
We are selling manufacturing equipment, and the software is the design tool needed to do anything useful with the equipment. The hardware is selling for around $200k to a limited number of customers. The software is useful at this stage, but there is certainly more features we could add.
- deadantenna 8y ago
  10-20%: This makes sense if you are Enterprise or Service provider vendor. We consistently deal with bigger vendors such as Cisco/Juniper, etc who charges these rates. If the equipment (with fully loaded Chassis) cost $1m after all the discounts, the maintenance contract runs $50-75K if you have many of them or $150K+ if you have only few. There is lot of good support, Warranty (free replacements), onsite support, that is provided with this. However, if you are talking about pricing recurring $10-20 for a $100 Mass market Product (example, Smart Home product, residential Routers, etc), that seems like a BS especially with most of these companies provide pathetic outsourced support who have zero knowledge of how product works and have never touched the product. But saying this, I have seen some of the companies going this route and not sure if this has worked well. The whole industry is going down "recurring" revenue path after success (or rather percieved success) of some of the companies. "significant upgrades" - how significant are these updates? If you compare with IXIA, Spirent, R&S, Agilent, etc they charge 10%+ for yearly maintenance and it is for " network and RF testing" equipment. I know some of the new vendors such as litepoint may not charge that much. Have you heard about fair.com and their model? Have you guys thought about "leasing" your equipment? Most of the manufacturing equipment I have seen becomes obselete once the technology changes. For example, once 5G mmWave is out, a lot of 4G-LTE only equipment may be obselete
  - throwawayprice 8y ago
    Thanks for the detailed response. My company's product is around $200k and will be used by a limited audience, not a $100 mass market product. Regarding the updates, how significant they are is hard for me to quantify, but we will be adding major new features. We have thought about leasing, but the upfront capital could be a problem for us. Do you have any links online to where these companies list their pricing including maintenance contracts? I am trying to compile a list I can share with my board to help us in making sure we are priced similarly to the market.
    - matt_the_bass 8y ago
      In my experience such pricing is not publicly listed. However you can often ask for a quote. Also trade shows are a good place to ask these questions.
- matt_the_bass 8y ago
  I work with a similar product in terms of cost, volume and hw/sw. We’ve found that customer word of mouth is really important and we’d rather that everyone have the best user experience (hence latest software) than charge them for it. Officially, customers get 2 years of software updates free. Unofficially we give it to everyone for free. Maybe this will change in the future. Good luck
  - throwawayprice 8y ago
    Even though you don't charge, what is the "official" price of the software on paper?
    - matt_the_bass 8y ago
      About 2% per year. That’s on par with many of the software only products (from other vendors and different type of product) that our customer base also uses.

throwawayprice 8y ago

We are selling manufacturing equipment, and the software is the design tool needed to do anything useful with the equipment. The hardware is selling for around $200k to a limited number of customers. The software is useful at this stage, but there is certainly more features we could add.

deadantenna 8y ago
10-20%: This makes sense if you are Enterprise or Service provider vendor. We consistently deal with bigger vendors such as Cisco/Juniper, etc who charges these rates. If the equipment (with fully loaded Chassis) cost $1m after all the discounts, the maintenance contract runs $50-75K if you have many of them or $150K+ if you have only few. There is lot of good support, Warranty (free replacements), onsite support, that is provided with this. However, if you are talking about pricing recurring $10-20 for a $100 Mass market Product (example, Smart Home product, residential Routers, etc), that seems like a BS especially with most of these companies provide pathetic outsourced support who have zero knowledge of how product works and have never touched the product. But saying this, I have seen some of the companies going this route and not sure if this has worked well. The whole industry is going down "recurring" revenue path after success (or rather percieved success) of some of the companies. "significant upgrades" - how significant are these updates? If you compare with IXIA, Spirent, R&S, Agilent, etc they charge 10%+ for yearly maintenance and it is for " network and RF testing" equipment. I know some of the new vendors such as litepoint may not charge that much. Have you heard about fair.com and their model? Have you guys thought about "leasing" your equipment? Most of the manufacturing equipment I have seen becomes obselete once the technology changes. For example, once 5G mmWave is out, a lot of 4G-LTE only equipment may be obselete
- throwawayprice 8y ago
  Thanks for the detailed response. My company's product is around $200k and will be used by a limited audience, not a $100 mass market product. Regarding the updates, how significant they are is hard for me to quantify, but we will be adding major new features. We have thought about leasing, but the upfront capital could be a problem for us. Do you have any links online to where these companies list their pricing including maintenance contracts? I am trying to compile a list I can share with my board to help us in making sure we are priced similarly to the market.
  - matt_the_bass 8y ago
    In my experience such pricing is not publicly listed. However you can often ask for a quote. Also trade shows are a good place to ask these questions.
matt_the_bass 8y ago
I work with a similar product in terms of cost, volume and hw/sw. We’ve found that customer word of mouth is really important and we’d rather that everyone have the best user experience (hence latest software) than charge them for it. Officially, customers get 2 years of software updates free. Unofficially we give it to everyone for free. Maybe this will change in the future. Good luck
- throwawayprice 8y ago
  Even though you don't charge, what is the "official" price of the software on paper?
  - matt_the_bass 8y ago
    About 2% per year. That’s on par with many of the software only products (from other vendors and different type of product) that our customer base also uses.