kofoid at biology.utah.edu
Fri Jul 29 17:56:15 EST 1994
In article <Ctnt0x.DBt at usenet.ucs.indiana.edu>,
gilbertd at sunflower.bio.indiana.edu (Don Gilbert) wrote:
> I believe you are wrong about a few thousand US$ being an excessive price
> for software developed for a niche market like molecular biology.
> Widely used commercial packages like wordprocessors can afford to sell
> for few hundred dollars because of the hundreds of thousands or millions of
> packages sold per year. The expenses to produce a good piece of software
> and especially the ongoing expenses to market it (e.g. to make sure some of
> you actually buy it) are very high, regardless of whether you sell 100
> or 100,000 copies. When I was an independent software developer and
> tried selling my software commercially, the advertising costs alone
> were enough to keep me from getting anywere: several thousand for one
> small, back of the magazine ad (the kind almost no-one reads) in one
> issue of one computer magazine.
> The molecular biology software companies do not sell 10,000/yr copies
> of their software. The market isn't that large. I don't really
> know the size, but I'd say 2,000/yr was a high number for a popular
> molbio program. Let us say it sells for US$3,000. That yeilds US$6,000,000
> gross income. Of that normally more than 50% will go toward
> advertising and marketing (required to generate that many sales!). It
> may well be that 70% to 80% of gross income goes to marketing expenses
> to generate those sales in the software business. Have you ever
> looked at the profit margins on some of the big software companies?
> If I recall, Borland had sales around $150 million a few years back with
> a profit of only a few hundred thousand (and they may well be losing
> money this year).
> Any complex software today requires many programmer-*years* to develop.
> Estimate $100,000/developer/yr including fringe benefits (this is probably
> a low estimate, but more than I earn:), with an estimate of 6-person-years
> to develop (widely used commercial packages would involve at least 10s
> of person-years if not 100s). Add in the cost of various technical
> writers, support personnel, etc. It adds up to where any profit is only
> a small percentage of the total income. And if a given package isn't
> popular, you loose money on it (paid for from profits on a popular
> package). Only if you sell lots more than expected do you see
> significant profits.
> This is all my rough estimation from the time when I was a very poor
> independent developer. Some software companies do make profits. But
> the mol-bio market is such a small one, and the required price for
> software packages to meet the basic marketting and development costs
> are so high, that it will remain a risky and uncertain market in my
> opinion. I don't have hopes of selling any of my software in this
> -- Don
> -- d.gilbert--biocomputing--indiana u--bloomington--gilbertd at bio.indiana.edu
Don't be so hard on yourself. Expect a check in the mail as soon as SeqApp
or SeqPup are finished. You certainly deserve it!
Eric Kofoid --- "No, it's so...
--- hot out there."
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