I would like a list of the 3 to 5 best sources of comprehensive
information about software economics. If I were choosing words from my
experience, I would ask for the best textbook. This textbook needs to
be at the undergraduate level. But there may be no textbook, so the
sources can be any form, from articles to web sites.

I am interested in consumer and business application software that
runs on personal computers, standalone & networked.  I am not
interested in higher value, lower volume software like we would find
controlling a communication satellite, a 747 or the IRS computers.

What I would really like is a spreadsheet with formulas, or an algebra
equation, where I could enter 2 or 3 known values & estimate 2 or 3
other values. Included would be a user's manual with text about the
underlying theories. I have no clue about what the elements of the
model might be, but as an example, if I knew the count of lines of
code, the manufacturer's suggested retail price matrix for the
program, & the installed user count, I could estimate the total annual
manhours of tech support, and the gross profit dollar contribution of
each new sale to a standalone user.

One of my main goals is to learn what the elements of the model should
be. It may be that the different markets are so different that a
single model with built in formulas is impossible. I at least want to
know what elements should be included.

I have reviewed a website "softwareeconomics.org". Most of the content
there seems to be at the graduate level, and designed for corporate
finance practitioners and above. It is above my ability.

I am employed as a salesman in the building products industry. The
point of this is that I am not a software expert, a licensing expert,
or a finance expert. I plan to use any information I obtain with your
help to negotiate with some software developers who have a particular
type of application targeted at an institutional market. I believe
this category of software has a market for home use. The current price
& delivery designs are based on assumptions that exclude single users.
I will use this information to understand the current models, & to
propose changes to the owner's designs that allow me to test my
proposal.

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Clarification of Question by pms-ga on 31 Oct 2002 17:34 PST

My main focus is on SELL PRICES. I include in this the 1-time price
for the application & the subscription for support & upgrades.

If it is not possible to get these types of SELL PRICE methods &
standards for "business & consumer" software, would it be possible to
get them if I limited the software categories to "games" and "high-end
animation"?

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Request for Question Clarification by omnivorous-ga on 31 Oct 2002 20:46 PST

PMS --

This is a very complex area, depending on likely volumes; service
requirements; delivery mechanisms.  You might wish to take a look at
the following and try to focus your question in a particular area:
https://answers.google.com/answers/main?cmd=threadview&id=62345

Best regards,

Omnivorous-GA

Hmm...the problem is there is not necessarily a direct relationship to
the complexity of a piece of software and its retail price. There are
number of different software metrics that attempt to measure and
predict the complexity and the amount of manhours required to produce
a piece of software.

For example number of lines of code (which is highly subjective in
itself - what do you class as a line of code?) does not necessarily
correspond to the complexity of the software or the cost to develop
it.

Software metrics that currently exist for costing a program take
refinement, and knowledge of the team of developers abilities in
working on the system. If anybody supplies you with a spreadsheet that
can acutally do this reliably then they'd make a bundle from flogging
it on to software developers.

If you want to know how much a piece of software is worth to somebody
work out how long it'd take them to complete the task by their
existing processes and then work out how long it'd take with the
software and subject one from the other to give the number of hours
saved per user per task, then multiply that by the number of times
they do the task in a given period and multiply that total by the
amount they get paid per hour - hey presto you've got a really rough
unscientific idea of how much money the software would save a person
per year/month/week.

PMS,

Software economics are often described within specific business school
cases, such as those for Microsoft, Netscape, and similar companies. 
The bulk of these can be purchased from the Harvard Business School
directly online:
http://harvardbusinessonline.hbsp.harvard.edu/b02/en/home/index.jhtml?_requestid=75232.
 Stanford GSB professors have also  published a number of cases, which
are worth looking at.

The one book (text) I used extensively in one of my classes is
"Information Rules" by Shapiro, Varian (HBS Press 1999).  This was the
most respected text for business school types as of 2001, and I
thought that it was very simple and straightforward.  It has a section
on pricing.

This recommendation is for becoming educated in this market, which
would be useful but is not necessarily answer how one should price
one's own very specific software.  This latter aspect is very
dependent (from my knowledge) on the type of problem you are solving
for your client, and analyzing how much your average client is willing
to pay for it.


Claudietta