Thoughts

The Best Business Model for your Software ?

Sometimes, there is a product of yours; a blog post, a code source, a tutorial or even a tweet, that just goes viral. You observe unusual statistics about it; people are reading/downloading/using/quoting/… it much more than what else you produced. The metrics won’t tell much about the why and, the time you understand it and make a plan to profit on it, it’s usually done and useless.

As many, finding a success and exploiting it to be able to live on a personal project seems a sweet idea. And occasional success, when you produce content frequently, is not a rare thing. The trouble is to transform it into something that let you, at least, finance your full-time implication on your personal projects.

My reflexion is an analysis on the opportunities and strategy to force a project successful into a source of revenue

Types of Softwares Productions

First we might need to get a rough idea on how types of projects are doing. The following represent my current understanding of the industry, don’t take it too roughly if I’m mistaken.

  • Open source : highly adopted, they are usually the handy tools few would pay off but everyone is glad to use. The few that have to pay are usually the company for license or support, generating few revenue but of high importance.
  • Expert system : few people know about them, they are targeted to specific domain and usually don’t have an open source counter part. The few clients are usually industries who pay high amount for acquisition
  • Product driven : in a more popular way, there are products who try to reach the larger audience. Therefore, most people have heard of them but the adopters and promoters are also the one paying the most for their products
  • Free software : they generate no revenue by definition but that also helps them to be adopted and promoted more easily; they evolve in different ways and spread more easily. Because, sometimes, ideas are more substantial than what they were applied to

From plotting the conversion and the revenue generated on a plane, I can picture the sort of a relation every software producer has with the public. In the plane of my links, I can picture the domain of scenarii. The worst case being on the bottom left; unknown with no revenue. The best case being commonly spread and generating massive profits on the top-right corner.

But, obviously, those extrems haven’t the same distribution; the first one being the default, ergo the common, case. The second being the unicorns, highly improbable. [none poops a Google or a Facebook in the morning or on purpose]

Spreading Ideas or Making a Living ?

According to the project you have; it’s better to face this question due to your limited resources.
As most of people, I’m alone when I do something and, if it gets too complicated, it’s hard to keep up with updates. Maybe, sometimes, when you really believe in your project it is better to let it be open sourced or free; people will manage to improve it beyond what you can manage to produce alone and great ideas can emerge from new adopters. Also, some licenses can restrict the commercial use, allowing to propose a paying license, support and extra features.
This business case is relevant when your project hits a sufficiently wide-spread audience. Though there also exists donations for the non-paying users to contribute.

Also, having limited resources, you have to study the case of other licenses. If your project benefits from other softwares, they need to be usable in a commercial case. If they are and there is no other option; it means you need to develop every external functionality in your proper implementation. That’s harsh as added work; it increases the cost of starting a paying product. Meaning the product-driven case is exclusive; it requires to have either few dependencies or to re-code them with extra cost for the software.

The different costs on this plane might vary alot. For example, how much is it to start being “heard about” ?
Getting people engaged is hard, so making the information is too. But we have tools, like social networks, to reach quickly the targeted audience. Today, we have an efficient way to slide on the bottom from the left to…. a value depending on which amounts of them you can reach.
Keeping them engage is another difficulty. Which is inherent to the quality of your product and its market place; free or not, it’s the same economic laws.

So we observe there are costs; we cannot be payable right up with no more cost than if we are open source. Though, from our different software scenarii previously seen, case when you can be paid by more people helps reaching a larger audience. From income, you can invest in promoting product; that’s an added value to reach a larger audience. And it works for both commercial use only and all customers payment.

 

I’m not sure how the plane might look if we had a cost dimension. And what could be a good business model to navigate this weird domain. But my feelings are telling some mixed business model could help navigate it better. Payment enables the feedback loop of adoption, if well used, but it’s also a break in early adopters. But I don’t have much overall clue on how to plot it.

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