Pricing a product is not an easy task. What is the right price? Will my potential customers think the product is too expensive or will they think it's too cheap? Should I price it high enough and have fewer customers or price it too low and have lots of customers? These are all tough questions.
When it comes to pricing software, it might be even more difficult. Say you spent 100 hours and developed a small piece of software. And say, that the technology used to develop it commands X dollars/hour in the market. So, the cost of developing it is 100X. If the estimated customers for the lifetime of the software is Y, any price above 100X/Y will break even. Ofcourse, the 100X needs to be adjusted to account for the cost of operating a website, online advertising and other operational costs.
Obviously, if all you can manage is to get the cost of the software, then there is no point in doing it, atleast it doesn't make economic sense. And obvisouly, there is no reason that the software should automatically stop selling after Y customers. As long as there is a need for what you offer, there is going to be some demand. The level of the demand varies with the price, ofcourse, it's economics 101.
One way to come up with an appropriate price for your software is to do research on competition. What are the prices of your competition. The idea is not necessarily to undercut them, but to get an idea on what your potential customers will expect your software to be when they are doing comparison shopping. Some times you are lucky enough to have competitors (or is it unlucky?) to figure out the rough price for your product. But sometimes, you may not have competitors for what you are doing! In that case, a good strategy is to identify a product of similar complexity and as close to your product industry as possible and research the prices and then price your product appropriately. Since there is no competition, you can even price it a little higher.
When deciding on the price, don't assume that you are done with the product development and you just have to sit and watch the cash register to keep ringing. No matter how well your software is designed, there are enough non-tech-savvy people who want to try out your software and they need support. So, you have the option of charging a separate support fee, or factor it into your product price. Typically it is difficult to justify support fee for consumer products (when was the last time you bought such extra add-on even for your $2K LCD HDTV?). So, keeping the product price about 20% higher than the original price you came up with is probably a good comprimise. Remember, unlike the B2B software, where it's possible to have multi-year support deals, B2C software requires support seldom beyond the first 90 days (actually probably less then 30 days, but I beleive not everyone tries to use the entire product in just 30 days).
When talking about software pricing, the volume of the licenses is one of the factor deciding the price. This is no different from some tangible item getting huge discounts with bulk purchase. If you think coming up with a right price for a single license is difficult, wait till a customer asks you for the cost of license for 5 of them. Or may be more!
Another interesting dilemma when coming up with a price is, whether to make the price public or not. Usually, the reason to not make the price public is to avoid unwanted competitive research but most of the time, it is to vary the price based on the customer, a practice most popular with the airline industry. Even though no one would like to pay no more than what someone else has paid, two people might be willing to pay completely different price for the same product depending on what they perceive as it's value. And the value of a product depends on what one can do with the product. For example, it could save 10 hours a month for one person while it could save just an hour a month for the other.
You may be familiar with a company called woot. They are not your typical online retailer who sells several products. They just sell one product a day and presumably a deal. This is an interesting model because, those who visit the site know that the product is not going to last more than a day and are forced to decide on buying it within 24hrs (for some really good deals, it's within just a few hours since the demand is so high that they don't last the whole day). This is no different from the concept of "limited time offer" where one gets an offer for just a limited time. Here it's just limited to 24hrs.
Can the same idea be applied to software products as well? Well, yes, that's what bitsdujour.com does and here is a link to their software product of the day. If you are thinking about discounting your software, checkout the type of discounts people have given for their software by looking at the discounted software in the past. One or two discounts are as high as 80%. It could be desperation, it could be a marketing strategy to increase the awareness and word of mouth publicity.
Hopefully, the above list of products and their pricing and discounts should help you come up with a good pricing strategy. Not really? Well, that's why it's a complex problem.