Imagine Software is set to come down to £3.95 as the Liverpool company clears the decks.

But the price cuts have been accompanied by persistent rumours that Imagine was in trouble, and last week general manager Bruce Everiss had to declare categorically that the company was in good health.

The new low prices will come into effect on March 26 1984. Mr. Everiss said there were three reasons for changing to £3.95:

• To try to deter piracy - Imagine has started to take a more active role in tackling software copying.
• To make room for a new generation of software products.
• For reasons of marketing - research has shown the company that a price below £4 causes sales to increase in multiples rather than merely in stages.

The new products Imagine refers to are a month or two off and they will cost £5.50 or more. It is also involved in contract work for a number of US micro manufacturers - Mr. Everiss claimed more than half its revenue comes from work performed for third parties, and of the remainder about two-thirds is accounted for by exports at the moment.

The suggestions of trouble at Imagine arose when details of a uncompleted contract it had been engaged in with Marshall Cavendish began to trickle out. But Mr. Everiss commented, "We parted company as the best of friends." Imagine had been appointed to produce software for the publishing company, intended to accompany Input magazines. "The initial level was do-able, but gradually they upped their sights," said Mr. Everiss. "We came to an amicable agreement."

Existing Imagine games cost £5.50. The news of its new prices leaked well before Imagine was ready to make an official announcement, and it has caused some embarrassment, particularly to the high street chain stores, which are now hardly likely to sell much software at the old price before March 26.