The price model shapes the product

James Fisher
Oct 6, 2014 · 1 min read

Your software company is driven by financial incentives. Your price model for the end user is simultaneously an incentive model for your company. Bad incentives can impel you to make bad software. Here are some ways that your product pricing can incentivize you to make bad software.

  • Charging for support incentivizes you to make buggy and unintuitive software. Instead, charge for the product or the service.
  • Charging for the hardware required to run your software incentivizes you to make slow software. (For example, many databases charge per core.) Instead, choose a better metric for customer success, like number of concurrent users.
  • Charging per feature incentivizes you to make software with featuritis. Instead, charge per hour. (Yes, you’re then incentivized to work slowly, but that’s different to making bad software.)
  • Accepting rewards for using specific software as part of your product incentivizes you to use the wrong tools. (For example, some companies accept payment from partners for pushing their partners’ products into client environments.) Instead, only accept payment for your product, not how it’s made.

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