How to price Software? (examples of comapnies)

Clearly, you cannot price your software for less than it costs you to
produce, and sell, each unit. These are your marginal costs. You might
think these costs are zero, but they are not.
You need to find potential customers and persuade them to buy.
If you have a sales team then you’ll need to pay them commission.
It will cost you money to support customers, and chase the customers
who don’t pay.
If you’re relying on an intensive sales model, with face to face meetings,
then your cost of sales will, of course, be higher than if you have a lowtouch,
web sales model. But you need to count the costs in both cases.
If you’re planning on not charging the majority of your users, then
think very carefully about the cost of each additional user. If you think
it is zero then you are almost certainly wrong. If you’re running a web
site, then each additional user will cost you storage space, CPU cycles
and bandwidth. This might be a very low cost – fractions of a penny,
even – but if you need huge numbers of users to make money then
small costs multiplied by vast numbers can equal big outlays.

Take YouTube. It’s a free service and, theoretically, supported by
advertising. The cost of serving each additional video is tiny (about
one tenth of a cent), but in 2009 it will serve up an estimated 75 billion
video streams. Multiply together the tiny cost and the large volume and
you can see understand why YouTube costs Google an estimated $710
million a year to run. It nowhere near covers its costs through
advertising revenue.

When Panasonic launched the 3DO, its gaming console, in 1994, Time
Magazine nominated it its product of the year. With a 32-bit RISC
processor, custom math co-processor and 2MB of RAM, it was far ahead
of its time. But Panasonic priced it at $699, way above its competition
and much higher than what even its target market of early adopters
could bear to pay. That, combined with muddled marketing, caused it
to bomb.
Other games console manufacturers learned from this mistake. When
the PS3 and Xbox 360 were launched, they cost more to produce than
the selling price that the market could bear, so Sony and Microsoft
charged consumers a low price, and accepted that they would lose
money (up to $300) on each console sold. They then recovered the
revenue through royalties on games people bought. The real price of
the console is hidden; buried in a clever pricing model.

With the Wii, Nintendo took a different approach. They wanted to
reach a much wider market than their competitors’ 18 – 35 year old
male sweet spot, but realized that older people, housewives and families
would pay less for a console than hardcore gamers would. So they cut
their cost of manufacture and used cheaper, slower components. When
the Wii was launched in September 2006, Nintendo made a profit on
every console sold. That made the games cheaper to produce too, since
royalty payments can be lower, but not necessarily cheaper to buy.