11 01/07
12:53 am

Choosing how to sell your product or service


The Past

In the last year, the web seems to have made a huge comeback. It obviously started much earlier than that, but the whole concept of social networking, blogging and podcasting only recently joined the vocabulary of people like my mother. We can credit much of this to the very lucrative sale of companies such as YouTube.

There was money to be made since the beginning of the internet, and I predict this will continue for many years to come. I caught-on to this real quickly and cashed-in through the purchase & sale of domain names. Soon after, I was being paid to help people get on the internet (tech support at an ISP). I landed my first full-time programming job at the age of 18, all thanks to a huge book and something called PHP3. I can remember my tech support co-workers teasing me about wanting to learn PHP, as if it was a waste of time. Well who knew I would make hundreds of thousands of dollars thanks to that book? I did. So why stop there?

The Present

After years of experience, you start to realize what suits you and what doesn’t. I’ve learned that working on teams without any decision power is not for me. I’ve also learned that I can’t always rely on other people to get things done. This is why I’ve decided to take matters into my own hands, build my software the way I want, and sell it the way I see fit.

The Question

I know exactly who I want to sell my software to, but I have a small predicament: how do I sell it?

Refer to this post from Brian Oberkirch to see his list of various business models.

To narrow my results and help me find the answer to my question, i’ve created a short list of possibilities and explain the reasoning behind each.

The Options

  1. Closed-source hosted application running on my own servers with various subscription plans (i.e. blinksale)
  2. Closed-source downloadable self-hosted application with a one-time fee + extra charge for upgrades (i.e: userscape)
  3. Open-source extendable & downloadable self-hosted application with a one-time fee + extra charge for upgrades (i.e. mint)

The Reasons

  • If I choose option #1, I won’t be able to charge for upgrades, but I get the advantage of recurring revenue, and fortunately for me, managing servers is also part of my expertise :)
  • If I choose options #2 & #3, I will have to offer much more support which could be quite costly for me, in terms of time. Then there’s the issues of piracy.
  • With option #2, the big advantage is that I can charge much more for the app and my customers don’t have to worry about their private data.
  • Option #3 is similar to #2 except that it gives even more power to my customers, allowing them to extend functionality of the software and even tailor it to their needs.

The Conclusion

I’ll explain my decision, but bear in mind that it’s specific to my software, and your needs could vary greatly.

I’ve decided to sell my product as a hosted service (with subscription plans, free trials, et al), but with a sprinkle of options #2 and #3. The data stored on my servers is not ‘that’ private, but still needs to be accessed offline, so I will also provide small downloadable tools to input data without requiring an internet connection, and the ability to synchronise with a central server when a connection is available. What will come from Option #3 is to provide an accessible API to allow developers to extend the functionality of the software and access their data using their own home-brew applications.

It might seem like overkill, but I am my first customer, and I know my software will not sell if it doesn’t do exactly what I need it to do, both online AND offline.

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