I now sell an auction sniping software in 2 versions: Basic & Standard. I did the Basic version by removing many features from the Standard version to sell a lower priced version to compete with other lower priced programs.
I now sell my Basic version at a higher price since I did add new features that make it better, but now I'm considering making a 3rd version that removes these new features and perhaps others to really leave only the minimum required for the program to do the basic job of sniping auctions.
This would allow me to compete with the programs selling for $3-5, while also giving the users the option to upgrade to a better version at a discounted price, and many will eventually upgrade to the better versions.