[prerok]

Well, I take it that it's always true and is a good lesson for anyone trying to set the price for their own product (like a hacked together side project one of us might be working on :) ).

My understanding is that the price should never be set based on production cost but on the value it brings to the customer. Thereby, a simple program you or I could hack together in a month, might have a cost of 10k in labor only cost, but if it would save the customer millions each year, they would pay a million for it.

So, you set the cost based on how much they are willing to pay, based on how much they would profit/save.

If another competitor offers a similar solution, you just undercut them by 10%, or invest another 10k for superior features.