AM: Price point marketing

[Larry Brown <larryb@digitalnow.com>]

I have an interesting problem, which I hope I can get some useful 
feedback on.  I'll try to describe it as briefly as possible.  Please 
feel free to write, or call, if you need additional information, or have 
some input.

We make software that is just being released to the general public this 
week.  It is called "Showcase" and is effectively a family photo 
organizer.  It puts your digital images in a picture album kind of 
display, lets you add notes, and sort it by every way possible.  We only
sell to resellers and are going to charge $5.95 per copy, they can then 
choose their resell price.

One of our distributors wants to buy an unlimited right to give away our
software to their customers for one year.  They develop the film in a
digital manner from regular 35 mm film.  They think, correctly, that
giving away our software with a digital order will increase their
digital share of  business. How much should we charge for this? It will
be a one time upfront fee.

We don't have a clue so here are some of my thoughts.

1) They will only be giving away our software to their existing
    customers.  I don't think this takes away to much from any of our other
    resellers marketing possibilities.

2) They have 1,000,000 customers.   Statistically about 40%, 400,000, of
    these have computers.  Currently 3% of their customers order digital
    film, in addition to regular pictures.

3) Our customer in Finland has 15% of their customers also order
    digital.

Any thoughts, ideas or suggestions?

Larry Brown, CPA
Chief Operating Officer
Digital Now!
larryb@digitalnow.com
703-902-0600 ext 104

Thanks in advance for your help!