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There's no software priced between $1000 and $75,000. I'll tell you why. The minute you charge more than $1000 you need to get serious corporate signoffs. Y

There's no software priced between $1000 and $75,000. I'll tell you why. The minute you charge more than $1000 you need to get serious corporate signoffs. You need a line item in their budget. You need purchasing managers and CEO approval and competitive bids and paperwork. So you need to send a salesperson out to the customer to do PowerPoint, with his airfare, golf course memberships, and $19.95 porn movies at the Ritz Carlton. And with all this, the cost of making one successful sale is going to average about $50,000. If you're sending salespeople out to customers and charging less than $75,000, you're losing money. The joke of it is, big companies protect themselves so well against the risk of buying something expensive that they actually drive up the cost of the expensive stuff, from $1000 to $75000, which mostly goes towards the cost of jumping all the hurdles that they set up to insure that no purchase can possibly go wrong. Joel Spolsky, Camels and Rubber Duckies http://www.joelonsoftware.com/articles/CamelsandRubberDuckies.html http://www.joelonsoftware.com/articles/CamelsandRubberDuckie... The second paragraph is the key. Alex, these people aren’t trying to piss you off, they’re being driven by what BigCo wants from them. BigCo won’t let a manager try some software and declare that it meets their needs. BigCo demands that vendors respond to RFPs and RFQs, and if one vendor puts no-nonsense pricing on their web site, all of their competitors will undercut them by a penny or so and they won’t get any sales. I could go on, but Joel has made the point: These annoying vendors have evolved to sell to those annoying customers. It isn’t the vendors that need to go extinct, it’s BigCo. BigCo buys cloud services in 2012 the way it bought time sharing in 1972, so the vendors are still using 1972 sales processes in 2012.

dpres 15y ago
Right on! This should be titled "How not to sell software that costs under $1000 in 2012" because the do/don'ts obviously are wrong for non-cheap software.
pnathan 15y ago
Actually, I know of a number of products that are in the [1K, 75K] range. * Visual Studio 2010 Ultimate * vSphere datacenter edition * TestComplete from SmartBear * > 3 perforce licences
- Q6T46nT668w6i3m 15y ago
  Adobe and Autodesk too. While Apple recently modified their bundles and lowered the prices for Final Cut Pro and Logic, they were both within this range and did more or less what Alex described.
- nl 15y ago
  If you are paying list price for those then you are doing it wrong
  - pnathan 15y ago
    Sure, but if you get 40% discount on, say, 10K, that's still over 1K.
- notaddicted 15y ago
  Joel's article was written in 2004 so, using gasoline as the benchmark, the 2012 dollars figure is $2180 [1]. [1] http://www.wolframalpha.com/input/?i=%28average+price+of+gasoline+2012%29%2F%28average+price+of+gasoline+2004%29+*+%241000&a=UnitClash_*%24.*USDollars--&a=*DPClash.GasPriceE.gasoline-_*AllGrades.dflt- http://www.wolframalpha.com/input/?i=%28average+price+of+gas...
  - einhverfr 15y ago
    SQL Server was in that range for many forms of licenses, and so was Windows Server when I worked at Microsoft. Actually I could think of a lot of software in that range. Today, I was looking at UBS in South-East Asia..... A basic system may be a bit below $2k, but a functional system is probably about $4-5k. Also a basic functional system of Sage ERP for smaller businesses is often well above $10k and below $50k
    - endersshadow 15y ago
      SQL Server was $50k per socket (going to core) for the Enterprise Edition as a list price. The typical SQL Server sale was >$100k, easily. Also, sales were negotiated and Microsoft licensing is totally fluid, especially if an Enterprise Agreement comes into the mix (where the cost is spread out over a few years). People citing MS licenses here are blind to how the majority of MS license in Enterprises get sold--huge deals with multi-year subscriptions that cost lots of money. MS will typically "true up" licenses at the end of an EA.
damoncali 15y ago
Pretty much the entire CAD market is in that price range...
- davyjones 15y ago
  I will add PLM/PDM software to that. What many people do not know is that most core CAD product companies have a PLM product as well that can contribute upto half of all company sales. I used to work for one and know this for a fact.
  - ableal 15y ago
    http://en.wikipedia.org/wiki/Product_lifecycle_management http://en.wikipedia.org/wiki/Product_lifecycle_management http://en.wikipedia.org/wiki/Product_data_management http://en.wikipedia.org/wiki/Product_data_management
- Game_Ender 15y ago
  For a single license, you usually by many licenses for a CAD product so you can get above the $75k price.
- joelhaasnoot 15y ago
  A friend who does 3D animation commented yesterday that while 3DS Max is 4000+ euros, all you get is a stupid little cardboard box with dvds.
- roel_v 15y ago
  The theory doesn't hold for commodity software, which makes up only a small part of the market (maybe not in dollar terms, but in amount of offerings).
robocat 15y ago
"There's no software priced between $1000 and $75,000." Although there are annual licences sold within this range (nearly all of our contracts are). Companies grok SaaS, whereas they probably wouldn'y have in 2004. We do all of his wrongs, but we don't sell to small companies.
- Zak 15y ago
  >We do all of his wrongs, but we don't sell to small companies. I have no real experience with big companies. Could you educate me on a few points? In particular, it strikes me as odd that these would be any different from consumer to small company to big company: Don’t hide your pricing behind a sales process Do people shopping for solutions for big companies not have any idea what their budget is? I understand there are always details to work out in the sales process on deals like these, but it seems to me that immediately knowing that your product costs five times what I'm supposed to spend would save your sales people some time. Don’t make me read a whitepaper in order to get essential information about your product. Put it on your website. In HTML. A web page with a URL that isn't a mile long seems like about the easiest way there could be to read about a product and share what you've read with other people in your company. Why would you not do this in 2012? Don’t make it hard for me to talk to a technical person at your company about the nitty gritty details of how your product works. I know a lot of times, technical people aren't the ones making the buying decisions, but is it rare for them to be involved? It seems like some easily accessible technical information could really speed things up when the purchasing guy asks the tech guy "will this actually work for us?", or is that not how things are done? I can think of sensible reasons people would violate the author's other demands when smaller companies aren't the target market, but these seem universal. Since I might some day make things I want to sell to bigger companies, I'd really like to understand what I'm missing.
  - cchurch 15y ago
    You're thinking about buying "big business" enterprise software like buying a cell phone or any other off-the-shelf commodity. Don't do that. It's more akin to buying a house. You've got to find one of many that satisfies your unique needs. You've got due diligence to do. You've got negotiations. You've got an entire purchasing process to follow that is externally imposed. You may have renovations to make before you can move in and need estimates on that. A website can cover generalities, but the reality is that enterprise products are big, complicated, and (generally) are not purchased by technical people, although technical people may be involved in part of the review process or requirements analysis. The only process more complicated is selling to the government.
schnaars 15y ago
Are you kidding me? SFDC is $125 a month per user. Even a small company is paying $15K a year for their licenses. Salesforce is doing okay.
- jjudge 15y ago
  Yes, but their pricing is published and you can easily sign up online.
mtts 15y ago
This was even untrue when Joel wrote it in 2004. If you're a small to medium sized business either in 2004 or in 2012 you pay in this price range for: - Site-wide MS Office licenses - Site-wide Adobe licenses (around 3000 a pop, I believe, so that's a LOT of licenses before you hit 75,000) - SAP Business One - or another ERP package aimed at small to medium sized business (AFAS comes to mind, but I'm sure there are others) - MS SQL Server - Supported Magento installations ... etc
- Nitramp 15y ago
  Joel is using a tool called "exaggeration" in this piece to make it more poignant and funny. You might have heard of that ;-) Seriously though: many of those software licenses are still below say $5000 per license/head/..., and they are very standardized run of the mill software. The article still holds: if you're running a dev shop on MS technology, you won't need manager approval and a sales process to buy Visual Studio or MS SQL, and the same goes for MS Office or Adobe products in a design company.
  - mtts 15y ago
    I'm familiar with the tool, and I enjoy it tremendously. In this case, however, I think we're dealing with the sometimes hard to distinguish "spouting nonsense" tool. :-) After a certain price point (say 10,000 for CAD packages and the like, where you're actually paying for some seriously specialized and advanced software) it's no longer about the software, it's about the customization. That's what those overpriced sales people come to talk to you about. Not only that, but once they're done you'll get and army of project managers and senior devs that come to visit you to figure out exactly what it is you need and by the time these people are done and all their salaries are paid, yes, you'll have paid somewhere upwards of 75,000 dollars but it's not a piece of software you've bought, it's custom development tailoring a specific package to your exact (hopefully) needs.

dpres 15y ago

Right on! This should be titled "How not to sell software that costs under $1000 in 2012" because the do/don'ts obviously are wrong for non-cheap software.

pnathan 15y ago

Actually, I know of a number of products that are in the [1K, 75K] range. * Visual Studio 2010 Ultimate * vSphere datacenter edition * TestComplete from SmartBear * > 3 perforce licences

Q6T46nT668w6i3m 15y ago
Adobe and Autodesk too. While Apple recently modified their bundles and lowered the prices for Final Cut Pro and Logic, they were both within this range and did more or less what Alex described.
nl 15y ago
If you are paying list price for those then you are doing it wrong
- pnathan 15y ago
  Sure, but if you get 40% discount on, say, 10K, that's still over 1K.
notaddicted 15y ago
Joel's article was written in 2004 so, using gasoline as the benchmark, the 2012 dollars figure is $2180 [1]. [1] http://www.wolframalpha.com/input/?i=%28average+price+of+gasoline+2012%29%2F%28average+price+of+gasoline+2004%29+*+%241000&a=UnitClash_*%24.*USDollars--&a=*DPClash.GasPriceE.gasoline-_*AllGrades.dflt- http://www.wolframalpha.com/input/?i=%28average+price+of+gas...
- einhverfr 15y ago
  SQL Server was in that range for many forms of licenses, and so was Windows Server when I worked at Microsoft. Actually I could think of a lot of software in that range. Today, I was looking at UBS in South-East Asia..... A basic system may be a bit below $2k, but a functional system is probably about $4-5k. Also a basic functional system of Sage ERP for smaller businesses is often well above $10k and below $50k
  - endersshadow 15y ago
    SQL Server was $50k per socket (going to core) for the Enterprise Edition as a list price. The typical SQL Server sale was >$100k, easily. Also, sales were negotiated and Microsoft licensing is totally fluid, especially if an Enterprise Agreement comes into the mix (where the cost is spread out over a few years). People citing MS licenses here are blind to how the majority of MS license in Enterprises get sold--huge deals with multi-year subscriptions that cost lots of money. MS will typically "true up" licenses at the end of an EA.

damoncali 15y ago

Pretty much the entire CAD market is in that price range...

davyjones 15y ago
I will add PLM/PDM software to that. What many people do not know is that most core CAD product companies have a PLM product as well that can contribute upto half of all company sales. I used to work for one and know this for a fact.
- ableal 15y ago
  http://en.wikipedia.org/wiki/Product_lifecycle_management http://en.wikipedia.org/wiki/Product_lifecycle_management http://en.wikipedia.org/wiki/Product_data_management http://en.wikipedia.org/wiki/Product_data_management
Game_Ender 15y ago
For a single license, you usually by many licenses for a CAD product so you can get above the $75k price.
joelhaasnoot 15y ago
A friend who does 3D animation commented yesterday that while 3DS Max is 4000+ euros, all you get is a stupid little cardboard box with dvds.
roel_v 15y ago
The theory doesn't hold for commodity software, which makes up only a small part of the market (maybe not in dollar terms, but in amount of offerings).

robocat 15y ago

"There's no software priced between $1000 and $75,000." Although there are annual licences sold within this range (nearly all of our contracts are). Companies grok SaaS, whereas they probably wouldn'y have in 2004. We do all of his wrongs, but we don't sell to small companies.

Zak 15y ago
>We do all of his wrongs, but we don't sell to small companies. I have no real experience with big companies. Could you educate me on a few points? In particular, it strikes me as odd that these would be any different from consumer to small company to big company: Don’t hide your pricing behind a sales process Do people shopping for solutions for big companies not have any idea what their budget is? I understand there are always details to work out in the sales process on deals like these, but it seems to me that immediately knowing that your product costs five times what I'm supposed to spend would save your sales people some time. Don’t make me read a whitepaper in order to get essential information about your product. Put it on your website. In HTML. A web page with a URL that isn't a mile long seems like about the easiest way there could be to read about a product and share what you've read with other people in your company. Why would you not do this in 2012? Don’t make it hard for me to talk to a technical person at your company about the nitty gritty details of how your product works. I know a lot of times, technical people aren't the ones making the buying decisions, but is it rare for them to be involved? It seems like some easily accessible technical information could really speed things up when the purchasing guy asks the tech guy "will this actually work for us?", or is that not how things are done? I can think of sensible reasons people would violate the author's other demands when smaller companies aren't the target market, but these seem universal. Since I might some day make things I want to sell to bigger companies, I'd really like to understand what I'm missing.
- cchurch 15y ago
  You're thinking about buying "big business" enterprise software like buying a cell phone or any other off-the-shelf commodity. Don't do that. It's more akin to buying a house. You've got to find one of many that satisfies your unique needs. You've got due diligence to do. You've got negotiations. You've got an entire purchasing process to follow that is externally imposed. You may have renovations to make before you can move in and need estimates on that. A website can cover generalities, but the reality is that enterprise products are big, complicated, and (generally) are not purchased by technical people, although technical people may be involved in part of the review process or requirements analysis. The only process more complicated is selling to the government.

schnaars 15y ago

Are you kidding me? SFDC is $125 a month per user. Even a small company is paying $15K a year for their licenses. Salesforce is doing okay.

jjudge 15y ago
Yes, but their pricing is published and you can easily sign up online.

mtts 15y ago

This was even untrue when Joel wrote it in 2004. If you're a small to medium sized business either in 2004 or in 2012 you pay in this price range for: - Site-wide MS Office licenses - Site-wide Adobe licenses (around 3000 a pop, I believe, so that's a LOT of licenses before you hit 75,000) - SAP Business One - or another ERP package aimed at small to medium sized business (AFAS comes to mind, but I'm sure there are others) - MS SQL Server - Supported Magento installations ... etc

Nitramp 15y ago
Joel is using a tool called "exaggeration" in this piece to make it more poignant and funny. You might have heard of that ;-) Seriously though: many of those software licenses are still below say $5000 per license/head/..., and they are very standardized run of the mill software. The article still holds: if you're running a dev shop on MS technology, you won't need manager approval and a sales process to buy Visual Studio or MS SQL, and the same goes for MS Office or Adobe products in a design company.
- mtts 15y ago
  I'm familiar with the tool, and I enjoy it tremendously. In this case, however, I think we're dealing with the sometimes hard to distinguish "spouting nonsense" tool. :-) After a certain price point (say 10,000 for CAD packages and the like, where you're actually paying for some seriously specialized and advanced software) it's no longer about the software, it's about the customization. That's what those overpriced sales people come to talk to you about. Not only that, but once they're done you'll get and army of project managers and senior devs that come to visit you to figure out exactly what it is you need and by the time these people are done and all their salaries are paid, yes, you'll have paid somewhere upwards of 75,000 dollars but it's not a piece of software you've bought, it's custom development tailoring a specific package to your exact (hopefully) needs.