Loud Thinking: Challenging life, software, and media
Saturday, February 2, 2002 @ 17:28

Microsoft quadrupling revenues on 75% price cut?

"If only software were cheaper, there would be no piracy". A nugget of hard-lived myth that has been thriving since Commodore 64 games were 10 bucks a piece. And Mark Minasi of the Windows & .NET Magazine keeps it breathing as point number 4 on his list of Top 10 Software-Installation Pet Peeves:

Software companies need to drastically reduce their prices if they want to force everyone to pay for every copy of their software
Microsoft Office is about $1000. So is Adobe Photoshop. Drasticly reducing prices on those packages might mean a 75% reduction to $250. What kind of empiric evidence does Minasi hold that garantees Microsoft and Adobe a four-fold increase in purchases to make up for slashing prices?

$250 for a software package like Office or Photoshop is still a lot of money—when you're accustomed to zero, as 75% of private consumers and small business owners are.

Microsoft, Adobe, and other major software vendors has business people to estimate demand at certain price points. The sticker price on their products are where demand times price provides maximum profits. And contrary to Minasi, these people base their strategy on facts, trends, and calculations.

Bury the myth.

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