Scrivener price increase on the horizon

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stevec
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Mon Jun 11, 2007 12:07 am Post

John is obviously a firm believer in "the invisible hand of capitalism," but it doesn't exist, because if it did then you wouldn't need to raise your prices because of VAT taxes or esellerate percentages, especially at just the time when you have released your product and are getting good press about it! According to this same lame Adam Smth theory, the increase in sales should allow you to lower your prices, yet you find your success a burden leading you to increase the price. How did that happen simultaneously?

The fact is that we are all "responding" to external stimuli, which is someone else responding to the same stimuli. Whether you pay the landlord and pay property taxes and his mortgage indirectly, or if you purchase the property and pay the banks interest and your own taxes and house maintenance directly, the overhead is still yours to maintain, but with different hands taking the same cash. The same is true of business decisions.

However, following the logic of John's claim to the marketplace, then you should lower the price of the software because lower prices will mean you wll sell more copies. You will richer selling a million copies at $10 than you will 10,000 copies at $100 (by a factor of 10 to 1.) And, a million users means a $4 upgrade will make you another $4 million. Pretty easy cash with a low level of resistence, and $14 million is a lot more than $1 million.

Of course, the challenge is to get a million users. First you have to get the 10,000 users. And that takes a lot of overhead in advertising; it has little to do with "the marketplace." He who advertises the most can have an advantage over those who don't. It has nothing to do with the price or the quality of the product, but rather the exposure and people knowing you and your product exist. (I was told about your product by Jer, when I was considering buying the over-priced Ulysess. If Ulysess was priced lower, we probably wouldn't be having this conversation.) Of course, the less expensive the product, the more buzz it will get, because people constantly complain about costs, and some people literally can't afford things (not just houses, but small things as well.)

Since you said you are better at coding than business, I am just offering my .02, based on years of experience and study of economics. Keep in mind that you just released the final product after years of hard work. It's a great product. You are probably a little excited, kinda nervous. You've already gone to a shark lawyer to make yourself "official," etc. And now your first executive choice is to raise prices.....hmmm. And then you are thinking about offering two tiered pricing, one for "poor" students and another for "rich" writers; (is there such a thing?) While it is easy to get lost and confused in the whirlpool of numbers and pride, your best choice is probably to just keep your cool. More prices cheapens the product, and those paying full price feel slighted. Let the price percolate in the marketplace. Focus on selling and advertising, and "talking it up," since you no longer need to spend as much time codeing.

At the end of the day, business is about volume. Without volume you have nothing, regardless of the individual unit cost. As such, you should be thinking about a strategy to increase your volume; increasing the cost is self-defeating imo, especially at this time. (maybe later)

Also, you should consider trying to make an alliance with someone like Popcopy, and offering a bundle together. Multiple clipboards is a natural tie-in for your product. (I wonder if Leopard will finally make it an OS feature.)

It is really hard to make a great product, but it is just as hard to sell it. Don't be misled by your "fans;" business really doesn't really work that way. They have their copy, and won't be buying another. It is the new users that you need to focus on.

P.S. You probably have Ulysses in a panic. You'll be doing them a favor by raising your prices. According to Adam Smith, they are planning to lower their price to be competitive with you. Two people have made almost the exact same product, and we call that "efficient." I wonder what you could have made if you collaborated. :-)

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AmberV
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Mon Jun 11, 2007 12:34 am Post

P.S. You probably have Ulysses in a panic. You'll be doing them a favor by raising your prices. According to Adam Smith, they are planning to lower their price to be competitive with you. Two people have made almost the exact same product, and we call that "efficient." I wonder what you could have made if you collaborated.


The Ulysses developers have actually been very open about their pricing strategy. They know it is over-priced, they have never denied that, and further they have stated that the main reason they have set their price-point where it is is to restrict customer growth. They only have so many employees to provide technical support; and they don't want a raft of people buying their very ideologically narrow application, without them understanding the reasons for how narrow the ideology is, and making endless demands to increase the scope of the application.

As stated in a recent post on this very forum, one of the guys from the Ulysses team is actually quite glad that Scrivener is around, because it addresses a lot of the market that they simply do not want to address at all. Now that Scrivener is a visible contender, it keeps potential customers and unhappy customers down on their side, as they only get the people who really want a plain-text lexically based writing platform. They only want dedicated customers who who really like their software. A higher price practically guarantees this. Support requirements are vastly reduced, and they can what they love doing, developing high quality software instead of spending all day on the forum saying "No, there will never be italics!"

If you want my opinion (and this is really without any sources, just a wild opinion): They've reduced the price because they no longer need so much of a user buffer. When they launched Ulysses, it was the only thing of its kind out there. They raised the price to 100€ in response to all of the demands they were getting to make Ulysses something it was not. Now that the market has exploded, and excellent alternatives like Scrivener have come along, they have a bit more breathing room. So why not drop it? The need for an artificially inflated price is gone.

Further, to say Ulysses and Scrivener are nearly identical is a bit hasty and uninformed. Sure, in the grand scheme of things, Ulysses and Scrivener when compared to enriched uranium are pretty much the same, but yes. There are some fairly massive philosophical differences between the two applications.
.:.
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kewms
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Mon Jun 11, 2007 2:01 am Post

stevec wrote:At the end of the day, business is about volume. Without volume you have nothing, regardless of the individual unit cost. As such, you should be thinking about a strategy to increase your volume; increasing the cost is self-defeating imo, especially at this time. (maybe later)


If that were true, artisanal products would no longer exist. They would have been completely wiped out by mass production. In reality, the opposite is true: artisanal producers are using tools like the Internet to free themselves from the tyranny of mass distribution. Plenty of buyers are willing to pay a very nice premium for quality and/or exclusivity. And plenty of sellers are finding out that all volume does is help you pay the middlemen, anyway.

Business is all about profit and profit margin. Would you rather sell 10,000 items for $1 at a 10% gross margin, or 10 items for $1,000 at a 50% gross margin?

Katherine

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stevec
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Mon Jun 11, 2007 12:09 pm Post

kewms wrote:If that were true, artisanal products would no longer exist.


Artists create because they love to create. It has nothing to do with money. Artists starve not because they lack business sense, but because the business world is so absurd. (Take the music industry, for example.)

While Scrivener is a technical product, it is still more art than science. The rules of business are based on greed and power, not art. Before one can balance these two conflicting passions (art and business,) one needs to recognize how the system exists. Dan, like everyone else, is simply trying to survive in a broken system. The "cost of support," advertising, and all other such issues are because we live in a sophist system where everybody is selling their words. (Sophistry is in contrast to Socrates, who did not sell his words, but rather pursued virtue.)

In other words, we are all sophists. That is the system our fathers bequethed to us. Business is about sales and convincing others to pay us for our "work," rather than someone else for their work. The best at this are still the evangelists; the same as always. If you tell someone they will go to heaven, then they will give you their money. If you tell someone they will go to Hell, they won't pay you anything.

L&L is a software start-up company, trying to boot-strap a unique product. It doesn't matter what Ulysses does or does not do, or what people feel he "deserves," it is all about marketing and sales volume. Those are the only checks he can desposit. He is not selling a supply item that gets consumed and re-ordered; there is a constant need for new buyers. As the comments about Ulysses reveal, the higher the price the fewer the buyers. If fewer buyers is not the goal, then higher prices should not be the strategy.

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kewms
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Mon Jun 11, 2007 3:08 pm Post

stevec wrote:Artists create because they love to create. It has nothing to do with money. Artists starve not because they lack business sense, but because the business world is so absurd. (Take the music industry, for example.)


Funny you should choose that example. In the music industry, a contract with a major label is likely to be a financial disaster for the artist: enormous costs are charged against their royalties before they ever see a dime. The middlemen, in contrast, do just fine.

On the other hand, independent musicians find it much more difficult to reach a large audience, but without as many middlemen they get to keep significantly more of the receipts from the audience they do have. See my previous post re: the tradeoff between volume and margin.

While a higher price usually does directly translate to fewer buyers, why is that a bad thing? If the lower price doesn't give a decent margin, the company will be out of business soon anyway.

Katherine

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notabene
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Mon Jun 11, 2007 10:57 pm Post

I'm sure that Keith appreciates all of this unsolicited advice on how to run his business. But, stevec, you're not seriously suggesting that he "make it up on volume" are you? Talk about sophistry! With your stated (and re-stated) vast business experience you should know better than that. That pricing strategy only works in an ever-expanding market in which a product's costs are fairly constant, thus being an additive to the bottom-line through the benefit of incremental cost savings. And even then, that discounted pricing strategy will only work for a limited time until the additional costs to manage and support the larger volume catches up with the enterprise. Then the price will need to be increased to account for the change in cost structure.

But none of that even applies here. Keith is not Wal-Mart. He doesn't have the benefit of a product mix to which he can reallocate costs. He doesn't have a vast market to tap into. He is one guy selling one product to a very limited market. In fact, he stated it here himself that Scrivener is very much a niche product, which demonstrates that he is under no illusions as to the size and scope of his market. Thus, based on these limitations, an unexpected hit like the VAT issue, can only be addressed through a price increase. Anything short of that would be stupid.

Now, while the prospect of debating you on economics and the evils of business and capitalism thrills me to no end, this will be my last post on this thread. Frankly, I've got more important things to do, like finishing the long overdue rewrite of my book to the delight of my agent and editor. Besides, I sense by some of your statements--"lame Adam Smith theory" and "shark lawyer"--that you've got some issues that go far beyond the scope of this discussion.

Regards,
John

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stevec
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Wed Jun 13, 2007 1:52 am Post

I Love Scrivener!
Last edited by stevec on Wed Apr 16, 2008 10:40 pm, edited 2 times in total.

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em
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Tue Jun 19, 2007 4:18 pm Post

Keith,
Would you consider adding a couple of 'backup' startups at the end of the trial? It wouldn't help me now but I had the problem where I hadn't realized my trial was over (1 day off) and I was allowed to start up and back up. Problem being that another piece of software locked up the computer before I had a chance to back up and now it's locked in.

Just throwing that out there! As I said I plan on purchasing anyway and it's too late for it to help me.

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KB
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Tue Jun 19, 2007 6:45 pm Post

em - in 1.1 the trial is changing so that you get 30 days of actual use rather than 30 calendar days. That should help in cases like this, I hope...

Best,
Keith

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Tue Jun 19, 2007 11:21 pm Post

That change probably takes care of a pet peeve of mine, and I have no idea whether it applied to Scrivener at any time...but just in case, I'd like to air it anyway.

Pet peeve:

I download a new 1.0 app to try out. I decide it's not for me and trash it. Two months later, 1.1 comes out with brain-tingling new features. I download 1.1. "This demo has expired," it tells me. GRRRR.

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Fri Jun 22, 2007 2:50 pm Post

I'll start by saying that I haven't read this entire thread—leave it to a bunch of writers :D to produce volumes on the matter—and I'm not bothered by price increases since the alternative is Microsoft's Kafka-esque pricing scheme (or, I suppose, NeoOffice's similarly Kafka-esque reliance on Java™). What I do feel based on reading Keith's original post is that it seems like eSellerate is the real winner here. It sounds to me like having a shell-suited ex-roadie with permanent five-o'clock shadow turn up at your band's gigs and demand a cut of the proceeds, on the grounds that he is your "manager."

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EricB
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Fri Jun 22, 2007 6:10 pm Post

A whole five dollars? No, you're nowhere near being a greedy capitalist yet. :lol:

I shouldn't say it, of course, but I'd pay considerably more for a product this good.

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Gordon
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Mon Jul 02, 2007 5:16 pm Post

I think you're crazy to raise the price by $5.

You should raise it by $25.

I'm not joking.

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werebear
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Thu Jul 19, 2007 3:51 am Post

Dear Keith,

I'm coming late to this discussion. Ya know why? Because I've been writing, that's why!

Geezum crow, man, I've created an entire book because of you. Because your intuition into the writing mind created a program that let me turn my meanderings and random thoughts and fervently driven musings into an actual BOOK which I can't wait to finish up and throw out there!

And I love ya for it, man!

(gee, can you tell when I was born? Huh?)

All asides aside, you have developed a quantum leap into the writing mind, marrying structure and content into a beee-aa-yoooo-ti-ful synthesis of Mac and & Mind, technology and intuition, creative spirit and pragmatic expression.

And you are worried you've raised the price FIVE USofA Amurrican Bucks?!?!?

Bless your marshmallow heart.

I DON'T GIVE A DAMN, SCARLETT!

You don't want to know what I'd pay for this software. Naaaah, you don't want to know. Even with the lamentable low the Amurrican dollar has been driven to with the assistance of a greed-stricken ideological-driven completely-asinine-devoid-of-reality-so-f---kup-I-still-can't-believe-it-at-times political climate kind of currency that you might ask me to pay, I'd still give you any price you might ask.

Such a thing is priceless...

So don't worry your precious head and sweet heart about it. You are supporting a family with small children and trying to find the time to use your own software to make your novelistic dreams come true. Dear Heavens, you could put up a Paypal button and I'd throw some of those devalued Amurrican bucks your way, just for the thrill of seeing my musings turn into an actual book I might manage to help support myself with.

What price?

By all the capitalistic dreams of avarice, you don't want to know what price.

Just do what you have to do. In this case, apologies are useless. It is WE who should be asking what we can do for YOU.

And that's my price.
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Gareth
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Fri Jul 20, 2007 3:51 am Post

werebear wrote:I'm coming late to this discussion. Ya know why? Because I've been writing, that's why!


I'm coming late to this discussion because I should be writing.

Nothing sensible to say... (common fault, they tell me)

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