I've created some software over the past 3 years and I'm now ready to go market. When I presented to my first potential big customer last week, my draft prices were laughed at because they were way too low. They even asked about the annual element to the fees, "is that per month or per year?" My customers are NGOs so they are kind enough to tell me

I've always been very thoughtful about the theology of fair pricing. I believe a fair price should have the following characteristics:

1) It should recompense the workers for their time so that they can live without worry, but...

2) If the price is so high that it makes me rich at the expense of the poor, then it is iniquitous. In that case I am essentially using the "deceitful weights" of Micah 6:11.

If the funder of an NGO is paying me so much to make me rich, it means a) the ultimate donors behind the funder have to pay more; a donor company must charge more for its products; the poor ultimately suffer and b) there is less money for the activities of the NGO using the software.

But then I got to thinking about Luke 16:9 - "make friends for yourselves by means of unrighteous wealth". If God gives me, by means of an iniquitous economic system, a lot of money there's an opportunity to use that money for God - build churches, fund missionaries etc.

But then would God give money through my participation in an iniquitous pricing system? If not, something else is going on.

I would really appreciate your thoughts as I am feeling very torn and don't know if it's the temptation to make a lot of money that is changing my mind. I want to store up treasure in heaven and not here, but will there be too many temptations to having a lot of money... I'd be glad to hear especially from people who think I should use the lower prices.

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Paul
No denomination, affiliated with FIEC
"Deliver me from worldly dispositions, for I am born from above and destined for glory" - Valley of Vision
"They think it strange that you do not plunge with them into the same flood of dissipation" - Peter

Only you and God would know if the temptation to make more money is your motive.

I've always believed that pricing should be "fair", low pricing may be a way to get your software into the hands of more people, you may want to use that as a marketing strategy.

If you earn a million dollars and still live modestly but use the money to further God's work then you've done a good thing. If you earn a million dollars and lose sight of God then you're on the wrong path.

Money is not evil, the love of money is.

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Jeff
Heritage Reformed Baptist
Akron, Ohio

Isn't "fair" pricing what someone is willing to pay? I mean, I wouldn't use that definition for a life essential like bread or water, but on a non-essential like a software program, it seems like the market should determine the price. If your price is too high, your clients will go elsewhere for development. On the other hand, if you price gouge, then (potentially) the entire software development industry could lose profit as they're forced to lower prices to compete.

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Charlie Johnson
Downtown Presbyterian Church (PCA)
Greenville Presbyterian Theological Seminary, student

I don't find anything in Scripture that precludes an honest payment for an honest effort. You have non-recoverable engineering (NRE) costs as well as on-going burden costs. You fees for your efforts should be based upon a break-even calculation and your business' ongoing costs. Review your business plan (do you have one?) and reconsider your approach to costs. If you want to be a non-profit, then file for non-profit status and price accordingly. Otherwise, consider the market forces and your company's future viability when deciding on pricing.

AMR

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Patrick
Member, PCA
Chandler, AZ
ReformedTheologyInstitute.com

I fear explanations explanatory of things explained.

Thanks for that. My current pricing will make plenty of profit - there is no other product available and there is a high demand. Any higher pricing and my fear is that it will be more than "honest payment for an honest effort". Should the price be based on what it's worth to the buyer, or what it cost the producer? I know modern capitalism says the former, but I think scripture indicates the latter.

No, modern capitalism does not assume what you assume. Your price should be based on what it cost to produce based upon a break-even calculation, what it will cost to continue producing and supporting, plus an acceptable margin of profit to fund ongoing internal research and development (IR&D), pay dividends to investors, and fund company expansion efforts, including ongoing improvements to your software.

It's the Lord's Day and we should table this discussion for the time being.

AMR

I've read that a listed company is legally obliged to maximise shareholder value which implies to me that they must charge as much as the market will stand even if it is iniquitous.

After much thought and consultation elsewhere I'm happier to charge the market rate if it's a big company. The advice I've received is that a company should expect to pay 0.5% to 1% of their turnover for the use of my software (not including on-site support and training) and that does agree with my estimation of its value. BUT the advice I've received is that it should be an annual charge and this is where I really struggle.

OK I've invested my time in this and not yet seen a cent and so when I do launch (maybe only 2 weeks away now!!!) it's absolutely right that my time be compensated even if it's historical and that there be enough money to, say, employ a software engineer to keep it up to date and a manager to run the training arm. If there's even more than that, then so long as the money is used for God's kingdom and does not cause sin, then I'm fine with that too. But to charge an annual fee even if the client uses none of the Software-as-a-service elements of the product strongly seems to me iniquitous and an unethical use of licensing law. It's like I'd be blackmailing them - "continue to pay me or else I'll withdraw your right to use this business-critical and competitorless software".

What do you think?

My mind is always being drawn back to Micah 6:11 and Luke 16:9 "to make friends for yourselves by means of unrighteous wealth" but also not to be a "man with wicked scales and a bag of deceitful weights" and this is quite disturbing my peace. Any advice would be welcomed.

I don't think Micah 6:11 is talking about the price you charge, but rather about a DISHONEST price. Most things were priced by weight, and a deceitful weight would be some kind of standard object that had been hollowed out or otherwise lightened so that the customer wasn't getting the full amount of product. In other words, it's not about the price you charge, it's about delivering what you say you deliver. If you sell apples at 2.50 a pound, and a customer hands you 5.00, then there better be 2 pounds of apples in the bag you hand them.

Whatever price you set, as long as someone is informed and willing to pay it, it's not a deceitful weight.

Perhaps you're right that Micah 6:11 doesn't apply, but I'm not 100% convinced. If the customer has no other place to buy the product a price can be agreed upon and still be a false weight. An example - where I live only about 1% of people have their own water supply and the only place to buy water tanks to capture rain water marks up their water tanks more than anything else (and they have an agreement with the manufacturer that they will sell them to no other resellers), making them outside of the price range of the poorest, even though they need them the most. They are using their monopoly to create a false measure - they are telling the customer that the water tank has a particular value when it doesn't. When I challenged them about this, they told me it was justified because it created jobs in their company, but this is essentially taking more money from customers into their own pockets. Now what if this shop started to get people to sign agreements that they would have to pay annually for the use of the water tank being sold to them... doesn't that strike you as iniquitous? It is falsely setting the value of the product.

[quote=dr_parsley;687380]"Value" is not necessarily money now, but money later, hence the issue of ongoing IR&D, lest you want to be a one-trick pony.

License fees should presuppose ongoing development, improvement, bug fixes, and hence new releases for fees received. Nothing here that would be akin to "blackmail", and it is certainly acceptable business practice to "lock in" a user base with its most invaluable software.

AMR

As an Architect working for customers with different means to pay the same

kind of service, the Project of a House or Small Business, I believe I can truly

understand your Dilemma (more so in your case of course).

I actually started recently to work for a Christian NGO, and I’ve been

thinking again about what really would be a fair price.

So thank you for a very useful question and insights.

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César Proença

there is no will nor running by which we can prepare the way for our salvation, it is wholly of the Divine Mercy Jean Calvin Institutes II . V. 17

Reformed Churches in The Netherlands (liberated) http://www.gkv.nl/main.asp?intTreeviewID=954

Igreja Reformada em Massamá Portugal http://www.igrejareformada.pt

Is this Christian-related software, or secular?

If you felt that the money you took in was too much, perhaps you could develop a "charity application" or some sort of application which would "reduce" the fees for those organizations or individuals who you deem should not be paying the "full" price.

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Mitch
Presbyterian Church of Coventry, CT (PCA)