Software Pricing Strategies

Proper software pricing is a key component of optimizing your software marketing strategy.

In the current software marketplace, many vendors are moving to a multi-level pricing strategy: They may continue to have a higher-priced one-time license software product, but are also trying to take advantage of the move to various services business models to create a lower-end subscription-based product to reach a broader customer base. There may be multiple such products. And often the service or subscription-based product is sold and marketed through the channel or partners.

Subscribe to our Free Newsletter



new Go-to-Market Toolkit

We have just launched our Go-to-Market Toolkit, with guides, templates and checklists to plan a successful software launch. 

Check out the Toolkit here, or you can get a free Go-to-Market Checklist one-pager if you sign up for our FREE monthly newsletter here.

If you prefer, you can also check out our other software marketing downloads.

Channel Software Pricing

How does one define an effective pricing strategy to make sure you're capturing as much as possible of the available market, while at the same time minimizing any channel conflict?

How do you create a win-win situation so that as the software vendor you can maintain your brand equity in your customer's eyes, while at the same time the hosting or SaaS vendor may have the primary end customer relationship?

Channel conflict happens when a new sales avenue for software or services threatens to cannibalize existing sales channels for essentially the same product or service. For example, a licensed software product direct from the software vendor, versus a software service from a SaaS provider. There could be other channels you utilize for your software product also, such as VARs, OEMs, retail, etc. Channel conflict can cause significant loss of profit margin for both you and your channel partners.

To avoid this, it is important to proactively develop a comprehensive pricing strategy prior to venturing into new channels. You should do this by:

  • Defining All Channels - which channels might you sell into, given the new software business models? Consider both software products and services, and potential partners for both.
  • Understanding Channel Expectations - what are the typical margins for each of these channels? How does licensing typically work in each channel? Some are still in definition and undergoing realtime evolution (such as SaaS), but you should make you best current estimation, and tweak over time as needed.
  • Assessing Your Costs - what are your actual costs to deliver into each channel? This can help you determine which channels you should even be in.
  • Developing Your Software Pricing Levels - assuming you need to cover your costs for each channel, and meet channel expectations, this should allow you to develop a multi-level pricing scheme that will work for your product and what the market will bear.



  1. Home
  2.  ›
  3. Marketing Strategies
  4.  ›
  5. Software Pricing Strategies

Recent Articles

  1. Software Business Plan and Marketing Strategy

    Apr 26, 19 03:33 PM

    Get tips on defining the best software business plan -- one-time software license, SaaS, subscription, or a hybrid model? Read more to learn how to write a strong business plan.

    Read More

  2. Hiring a Software Marketing Firm - What to Look For

    Apr 04, 19 10:05 AM

    Thinking of hiring a software marketing firm? Get some tips on what to look for, what to avoid, and how to manage the process of marketing outsourcing.

    Read More

  3. Software Marketing Consultant Services

    Apr 03, 19 02:18 PM

    Need the help of a software marketing consultant? We provide services to help with marketing strategy and business planning for your software company.

    Read More