For a while it bothered me.
Charging people all over the world $80 for a text editor that was good, nice and compact - but hardly all and everything.
Like so many other posters noted, the microeconomic truth that elasticity of demand only exists within a modest range around the product’s natural price-point seems very relevant to Sublime Text. Or, putting it plainly, ST would have vastly higher sales were the price around $25. It’s easy to see all the cash-strapped self-taught coders buying it then. No doubt even many coders in Africa, S. America and SE Asia would give it a run at that price.
But let’s look at the other consequences of these high sales with much lower margins. Clearly, to maintain revenues at the level achieved under a $80 price tag, the $25 product must sell volumes 3-4 times that sold previously right from the price-change.
More pointedly, the huge influx of new buyers will include many less proficient coders - since the latter would generally be able to afford the $80 price - and a good share of these will have less ability in using the product, handling bugs encountered, etc than the well-supported professional users. To maintain usage (and hence future update revenues) by the new customers, STHQ Pty would have to lay on substantially more tech support staff to help these newcomers over the product acclimatization hump and this would seriously eat into the increased sales, especially in year 1 after the price drop. As well as having additional tech support needs, the new customers would also have new and varying opinions on software enhancements. What John Van Dyck at Cardway Inc in NYC would like in a text editor reflects the needs of his employer. These will be very different from what Jomo Ndoya, a freelance web engineer in rural Kenya, would find useful.
So the key to achieving the promised profits (as opposed to revenues) lies not only in price positioning but in balancing adequate support obligation with the needs/capabilities of customers. It is a sad but nonetheless understandable truth that new enterprises almost always seek out the lowest hanging fruit amongst their potential customer-base as this provides the safest and quickest route back from their startup debt. Hence ST’s emergence as a light, fast and popularly-featured text editor for (I believe) mainly web scripting applications. Its initial target customers were out-and-out professional web engineers who would readily pay the tag price for this new editor. The tech support overhead for these code-proficient users was minimal so almost all STHQ Pty developers could be used for product enhancement. Initially, most of the target customers would have fairly similar favorite features so developer activity could be focussed on a small set of objectives that were often mutually inclusive, if not mutually supportive. But as soon as the customer base enlarges to take in the small company users where the IT expert (if any are there) is an overstretched all-rounder, you immediately have to make a higher development architecture provision to handle the diversity of the user base and their desired features.
That’s the commercial crux of bringing technology to the masses in an affordable way without debasing the product’s perceived value. I’m not saying that there aren’t ways through this, e.g. intermediary support companies, but it is something we must be mindful of when looking for price drops simply on the basis of compensating revenues. Revenues aren’t the thing. It’s profit that keeps an enterprise going and growing.
Okay, $80 is still a bit steep and maybe others in this forum may have given this matter more thought. Let’s hear from you.