[danielsoneg]

One of my favorite anecdotes about that comes from an article found here (can't remember the exact article): The author (a developer) went along with their lead salesperson on a call to MIT. After demoing the product, which normally sold for $150k, the MIT rep asked about the price. The salesperson immediately said "$1 Million" - the MIT rep chuckled and said, "Oh come on, that's ridiculous - you know we don't pay more than $650k for software." The salesperson responded, "Ok, we'll let you have it for $650k - now let's talk extras."

So yes, price is a function of demand first - don't tell the customer what it's worth, let them tell you.

[ohashi]

I was expecting this to end with a couple of kids at MIT built the thing for free and open sourced it.

[aaronbrethorst]

I think you're referring to this story: http://venturehacks.com/articles/pricing

[HeyLaughingBoy]

I think the author was Steve Blank. I have an MP3 where he mentions this happening, but I can't for the life of me remember the name. You can probably find it on IT Conversations.