But software has effectively zero marginal cost. Meaning normal competition and the free market just don't work.
Say a company makes some software that costs them a million dollars to make. They figure their best chance of making a profit is by pricing it at $100, and selling at least 10,000 copies.
Now another company decides to compete as well. It costs them a million dollars as well to develop their competing product, which we can imagine is every bit as good and serves the exact same need.
But they figure their best chance of making a profit is to sell it for $10. Sure, they make less per copy, but the lower price should allow them to sell a lot more. So they'll need to sell at least 100,000 copies.
That's bad. There is no reasonable way of saying how much value a single copy has. It's not like making, say, a bicycle where the bulk of the price is to cover the marginal cost.... i.e. the cost of making one more bicycle.
Anyone developing software must realize that they could be massively undercut by competition. It's just not a stable model.
Does anyone remember when Apple's WebObjects product was reduced in price from $200,000 to $699? Then a year later, bundled with the operating system?