ValuAdder Business Valuation Blog

Imagine you run a restaurant popular with the locals. A new customer steps in, orders refreshments, pays and walks out. A week later, they show up again and demand to be served a sumptuous lunch for free. “I paid you once already, so this one should be on the house”, they say. What would your reaction be?

In the world of business software, some customers believe they are entitled to free new editions of the product they once purchased. Why should they pay more than once? Pay once and enjoy free products thereafter, that’s the way to go.

Well, let’s set the record straight on this: each and every new edition of a business software product is decidedly not free. It requires major investment and hard work.

Software Development is no Walk in the Park

To get a business software product that continues to deliver value, software development companies must:

  • Conduct in-depth research and development.
  • Invest substantial engineering time and effort.
  • Perform rigorous testing to ensure the product functions as intended.
  • Incorporate the ever changing security enhancements.
  • Optimize the product for peak performance.

All this calls for considerable skill and experience. A typical software development team consists of skilled software engineers and scientists using sophisticated tools to manage the software development and delivery process. And none of this is free or cheap.

Some customers believe the resulting new product upgrades should be free. Really? Ask your local car dealer if they would be interested in handing out complimentary new cars to all their past customers.

It’s All About Value

The fact is you pay for an upgrade because it offers value:

  • Latest features you could really use.
  • Better performance.
  • Enhanced user experience.
  • Critical security improvements.
  • Ongoing product support.

Let’s face it. New products come at a price. And that is fine. So long as you get what you pay for.

See Valuation Tour