SOFTWARE RIP-OFFS!

Spencer W. Thomas spencer at med.umich.edu
Thu Jul 28 12:30:58 EST 1994


Because the market is so small.  People who write software have to
recover their costs, or they won't be in business very long.  In
contrast to many other products, the per-copy cost of software is very
small, but the up-front costs are frequently quite large.

Let's suppose the software takes 2 person-years to produce, at
$50K/PY, or $100,000 initial investment (this is definite low, for
really good software).  If you're going to sell 100 copies, then just
to recoup your initial investment, you've got to charge $1000 each.
Of course, this doesn't keep you eating, nor does it pay the postage
and media costs (admittedly very low), nor does it pay anyone to
continue to improve the software (at $50K/yr/programmer =
$500/copy/programmer if you sell 100/year).  As you can see, this adds
up quickly.

If you're going to sell 1000 copies, then you only need $100/copy to
recoup your investment.  I'd venture that DNA sequence software is
more likely in the former (very low sales) category than in the latter
(somewhat low sales).

--
=Spencer W. Thomas 		|  Med Ctr Info Tech, B1911 CFOB, 0704
   "Genome Informatician"	|  Univ of Michigan, Ann Arbor, MI 48109
Spencer.W.Thomas at med.umich.edu	|  313-764-8065, FAX 313-764-4133




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