Path: utzoo!attcan!uunet!aplcen!uakari.primate.wisc.edu!zaphod.mps.ohio-state.edu!mips!daver!dlb!netcom!mcmahan
From: mcmahan@netcom.UUCP (Dave Mc Mahan)
Newsgroups: comp.sys.amiga
Subject: Re: Shareware v. Commercial (was Re: An issue...Amiga Community.)
Message-ID: <12515@netcom.UUCP>
Date: 26 May 90 09:10:23 GMT
References: <5366@jhunix.HCF.JHU. <1403@faatcrl.UUCP> <265DC532.5338@paris.ics.uci.edu>
Organization: Dave McMahan @ NetCom Services
Lines: 75


 In a previous article, rlittle@ics.uci.edu (Robert A. Little) writes:
>Software companies aren't criminals, but passing along the costs of bad
>advertising campaigns and methods isn't exactly fair.  I recently purchased
>_Dungeon Quest_ (a VERY good game) for $49...Now, I didn't hear about
>DQ from a Magazine or any other source which FTL (the distributor) would
>have advertised in; in fact, I heard about the game from a friend of a friend,
>etc.  My point is this:  FTL did NOT spend that much money on advertising, if
>they did, then the money was unwisely spent, and I'm sure the development
>wasn't THAT expensive (a complete custom programmed business package of mine
>costs at MOST $5000)  So where do they justify the cost?

Your kidding, right?  Where do you think your friend-of-friend-of-a...
heard about it, the saying on the bathroom wall?  If he didn't read a
magazine add or review, or someone along the way didn't, or there weren't
enough adds to justify the software store who purchased the game for demo
originally, how did DQ become so well known?  Somewhere, someone had to
tell someone else.  That's just the way it works.

I know very few successful software vendors
that just buy mailing lists of amiga owners and mail out a few free 'seed'
copies to spread the word.  Even that method is telling someone by letting
them demo the product.  Advertising is a thing that produces a VERY poor
return for the number of people reached.  The secret is to hit a large number
of folks.  That's why they call it 'mass' media advertising.  The targetted
marketting (preaching to amiga user clubs) is much more time consuming and
just not as effective for the big vendors.  It's all right for the small
guys that are willing to invest in sweat equity by doing shows themselves
or giving user club talks, but companies like FTL can't afford to pay the
manpower to do that kind of thing, since such meetings are not spaced closely
enough together in time and space to make it economical.  Sure, there are
exceptions, but when was the last time you heard of Manx or Lattice doing
a road show in the greater Montanna-Wyoming-Idaho area?  Mass marketting via
mail (and TV, but that's even more expensive) is about the only cost effective
way to do it.

To answer your question, they justify the cost by taking expenses for a
month and dividing it by costs for a month.  A couple of months are used,
but you have to be good at projecting such costs for a real figure.  You
then add some fudge factor, a little profit, and you end up with $49.95.
I have found that in software, (as well as most other tasks) things always
take more time than originally projected and cost more in resources than
orignally projected.  Companies like FTL have learned this fact and realize
what price they can sell for and make a profit (or at least, stay in business
until tomorrow).  It worked on you, didn't it?    (-:

The laws of economics state that every free market will seek a level.  If a
product is overpriced in the eyes of the buyer, he won't buy.  If the buyer
thinks it is a good value and has the money, he will buy.  Raising the price
will increase dollars per copy sold, but probably decrease total sales.
(I know, I know, there are exceptions to this and every rule due to a
higher price projecting more 'perceived value' a la BMW, but this is just
simple economics.  I'll argue the advanced stuff via E-mail, but not here).
There is a magic price/profit ratio every company would love to find,
but most companies guess at what it will be and then add a little more to
cover their risk (the 'fudge') and some to cover their food (the 'profit').
Companies that guess wrong about the size of their market or their pricing
point either don't make as much money as they could (but sell lots more
copies and become more famous, possibly even a 'standard') or are left
twisting in the wind when the debts come due and there is no money to pay.

Personally, I'm for the free market.  Let every comer take his best shot.
Those that have something of value (in the eyes of others)  will be around
tomorrow.  Those that don't have enough value for their cost will have to
find something else to do.  This includes shareware, PD, tryware, commercial,
retail, mail-order, BBS-distributed, whatever anyone can think of and is
willing to back with money and time.


                 The market will decide.


>Clueless Rob Little

    -dave