You'll never win with a price buyer. You can cotton to his needs, but they won't stop until the price is free.
It sounds like you are selling to enterprise and/or government. The normal rules about being the low cost provider don't apply like they would in the consumer market. Joe Spolsky has some interesting tidbits on that one. Every time they increased Fogbuz's, their sales went up as well. There's an aura of price==quality in enterprise software. Instead of offering a product with less features for a cut-rate price, introduce a deluxe version with a couple extra features and double the price. You might be surprised.
It sounds like you are selling to enterprise and/or government. The normal rules about being the low cost provider don't apply like they would in the consumer market. Joe Spolsky has some interesting tidbits on that one. Every time they increased Fogbuz's, their sales went up as well. There's an aura of price==quality in enterprise software. Instead of offering a product with less features for a cut-rate price, introduce a deluxe version with a couple extra features and double the price. You might be surprised.