I think module pricing might depend greatly on whose shoes you're in. But overall I think the current module pricing is about right since the market DNN holds is mostly DIY's and site developers. If the modules prices increase that will put a dent on the profit margin's for the site developers and put a huge dent in the number of DIY's that use the framework.

Where I do see a problem, however, is the module developers having to give up 25% to either snowcovered or the DNN marketplace in order to get their module's into the hands of the end users. Not that I have a problem with either of those stores it just seems like a lot to give up based on the prices of the modules. Since DNN benefits so much from having affordable modules I would think they would have made the marketplace less expensive. Although I would imagine it is difficult as they probably don't want to step on snowcovered's toes.

With regards to Community Server - they are not in nearly as good of a position as DNN. Their product is largely based on the social networking fad. While that fad may not disappear for awhile it is definitely going to fade - probably sooner rather than later. The market for $20,000+ social networking sites is going to be a limited one. While DNN is late to the social networking party (especially since we probably won't see a good working version of DNN 5.0 until Jan. 2009 or so) once they do get it out I would have to think it would soak up a decent percentage of the demand for CS.

Greg

Greg,

  We did a fair bit of research when originally setting the margin for selling products in the Marketplace.  If you look at other online resellers you see a margin of anywhere between about 15% to 40% depending on the services being offered.  Like every other business, both the Marketplace and SnowCovered have to set their prices based on how much it costs to provide the service.

As I pointed out earlier, I think that the problem in the DNN community is that we have only catered to the DIY and small site developers.  We are missing huge market segments, that quite honestly are much more profitable.  It is much easier to offer products targeted at the SMB market if you have some larger profits being generated from higher end products.  This year I saw AspDotnetStorefront jump into the DNN market with a relatively expensive product.  Without getting into details, I know that the sales figures for that one product are huge.  Not because I think the product is the best ecommerce package ever written - it's not, but because it serves a large untapped market segment which will not trust their businesses to an innexpensive product.  When people are building key parts of their business around a product, they are willing to spend a significant amount of money to ensure that their business succeeds.

Josh Koppelman, from First Round Capital, discusses this in his blog on the Anti-Penny Gap.  When people are placing the security of their company in the hands of your product, then they are willing to pay premium prices to minimize their risk.  Products like ecommerce packages, forums, and CRM are just a few examples of products which play a pivotal role in many businesses.  As such, all other things being equal, people assume that underpriced products represent a larger risk.  Whether it is risk caused by poor product support, poor documentation or even the inability to make much needed product enhancements in a timely manner.

Also, I agree with Jeff that Social Networking is not a fad that is going to go away.  Social Networking is moving into the enterprise in a big way and you will see more and more vendors targeting this market in 2008 and 2009.  Many of the current social networking sites show just a single aspect of what truly defines social networking.  Where you will see big gains is in vendors offering comprehensive suites that allow people to build relationships between other users and to link data together in new and useful ways.  It is about breaking down barriers to communication and making data more accessible throughout the enterprise.  Large organizations are rife with problems created because "the left hand doesn't know what the right hand is doing".  When you provide tools that allow the various parts of your organization to develop new communication patterns that are more organic and less autocratic, then you increase the flow of knowlege within the organization.  There is a huge amount of data locked in word documents and powerpoints, blogs, forums, and numerous other data silos.  Social Networking is about removing the silos from both the personal interactions as well as the data interactions.  Tag clouds and similar technology allow me to find relevant information, whether it is sitting in a word document in HR or is in a forum post in QA or is posted in a blog by some manager.  This is but one example of how businesses are finding value in social networking and why I don't think you will see it go away anytime in the near future.