From some recent discussion on a trading forum it seems there is some confusion (or call it mystery) about the PowerST product, in particular why it is priced at $25,000. Someone posted a comment saying for that kind of money he would write a backtesting engine for any takers. Clearly the person who wrote that comment had no idea the scope of undertaking it is to write a software program like the PowerST software. Responding to the challenge of that comment led the PowerST developer to writing the following history of the PowerST software.
The following is a retrospective history of the PowerST software and the current pricing.
I started working on what is now the PowerST software in December, 1988 as a hobby project. The hobby project became a moonlighting business, then a full time business in Spring, 1991. I spend the rest of 1991 on full time software development. In 1992 I had some beginners luck hooking up with a well known name company that helped me get into the business of providing software for commercial trading systems. That remained my main business through the 90s. That and I have always picked up custom programming of trading strategies here and there, including through the current time frame.
In the late 90s I decided that I wanted to develop the software into something users could program themselves (as opposed to in the early days I would do all of the programming of the trading strategies myself). In other words, a commercial backtesting product. That was several years of software development where lingering income from the commercial trading systems business kept me going. I first announced the PowerST software as the product it is today in Spring, 2000, which led to some sales to early adopter customers.
The early 2000s were spent getting those early customers up and running. Each new customer would have needs for software features which I would spend months developing. I took on customers one at a time and worked with each new customer individually. The early customers were happy with the experience because they were getting personal support and software customized to their needs and suggestions. However, this was all very time consuming. That period of working with the first handful of early adopter customers spanned into years of software development. Those were lean years because I was selling the software at commercial software pricing and was able to take on only a handful of customers, and the commercial trading systems business had faded away at that point.
My fortunes started to improve when I hooked up with a startup hedge fund in December, 2004, an association which continues to provide income to this day. That customer became a source of ongoing custom programming income plus they made a suggestion which changed the nature of the PowerST software business.
It was this startup hedge fund customer who suggested that I should vastly raise the price. They felt that the capabilities of the software justified a much higher price than I was charging, and that it would be a better business for me to raise the price and target the software to business level users.
That suggestion was the turn around for the software business. I made my first $25,000 sale in July, 2006.
Notice from this history it was 17 1/2 years of software development (from December, 1988 to July, 2006) to get the software to the point of justifying that price and making the first sale at that price level. Yes, that was not 17 1/2 years of full time software development. The first years were part time, and since 1992 I have intermixed software development with custom programming of trading strategies and generally running the software business. But more than half of that time had been full time software development. So let's say it was equivalent to at least 10 years of full time software development to get to the point of the first $25,000 sale.
Besides, even in the time not spent directly developing the PowerST software, something I learned is that you can't write this kind of software in isolation. It requires working with real users, working with a variety of users who will challenge the software in different ways, and the feedback from that process. Remember that the theme of PowerST is flexible ability to backtest challenging trading strategies. It would be easier to write software that provides a more fixed set of features. But for PowerST the hard part is the unexpected not the expected. To that end, there were core testing environment features which I wrote and rewrote 2 or 3 times as new requirements emerged.
So really the 17 1/2 years of work to make the first $25,000 sale was all necessary for getting the software to the point of justifying that price. The experience of running this as an ongoing software business, programming trading strategies for customers, and supporting customers doing their own programming. It was all necessary experience. Now as a result, in the years since July, 2006 the PowerST software has had tremendous ongoing success at being able to handle any trading strategy which customers have thrown at it.
People will question the PowerST pricing, but the fact is I have found customers willing to pay $25,000 for what the PowerST software has to offer, and then at times also to hire me as a consultant to help program their trading strategies or customize the software to their needs. I have had tremendous luck staying busy since raising the price to $25,000. That has been by establishing ongoing relationships with a small quantity of customers.
Really for me it has a lot to do with my personality and personal preference. I am basically a techie. I like writing software and I like working directly with end users. I prefer to work closely with a small number of users than to try and bounce around a larger quantity of customers selling a lower priced product. So I prefer being in the business of selling the software for a higher price and from that working closely with a small number of customers. Although to sell a product for $25,000 requires needing to offer something worthy of that price, which for PowerST is the programmability and customizability and the ability to test trading strategies beyond the capabilities of other backtesting software.
I am still actively developing the software to this day. I recently finished some updates to the charting feature, then a customer requested a performance improvement to the trades import feature which I recently completed, and I am working on upgrading the C++ compiler. These are my tasks in recent months. The software development effort is ongoing to this day. Not so much anymore in the core backtesting calculations which have been very stable in recent years, but in other areas for example I recently added a major new performance metric feature at the request of a customer.
It has been a tremendous amount of work, but I enjoy it. I set out to start an independent software business and have been successful at it for an extended period of time. PowerST customers appreciate the capabilities of the software, and trading strategy research is an interesting and challenging subject matter for software development.
President, RDB Computing, Inc.
Developer of "PowerST: The Power System Tester"