Chapter 23, Problem 23.1E

Explanation of Solution

Circumstances:

The circumstances where a company might charge higher price for a software system are as follows:

• When the customer is not having any alternative, the ethics of excessive pricing is considered in this situation.
• Where the customers has special requirements like rapid delivery.
• When the customer wants the developer to take a considerable amount of project risk.
• When the work is not central to the company’s business and if it diverts people from other business focused activities.
• The organization can make a great profit later by accepting a low profit on one project first.
• When the customers demand for the complete source code for future maintenance, the organization needs to charge a significant amount.