This is a response to a http://www.softwareceo.com/ forum thread:
“Forums member asifbiz has a service-based company, but he’s also got an idea for a product that he thinks will sell. Seems like a no-brainer…
selling services and selling product = more revenue. But it’s not so easy moving your SW co from a service-based model to a product-based model.”
——————————————————————————–
Hi there,
Another thought that has been looked over is that there are really 3x business models. You touched on it when you said you want to create ‘recurring income’.
1. Business Model A – “Service”
ie: $99 per hour or quote for services, maintenance etc
2. Business Model B – “Product”
ie: $99 Download or purchase boxed product
3. Business Model C – “Service+Product” (Subscription)
ie: $99 per month for online service
Product based businesses and service based businesses have fundamentally different structures, needs, resource needs, cash flow structures, marketing, sales models etc. This is why it is difficult to use your ‘Service’ based business resources to create a ‘Product’ based business.
From a www.softwareceo.com forum thread…
—————
Just another software idea
I have situation. A few years ago my wife and I started a small graphic design/commercial printing/dime-a-dozen homebased business. Anyway, she came up with a software idea that could be used throughout school systems across the country at just about every grade level. We are not programmers nor do we aspire to be programmers. I am looking for a reputable company that can put our ideas into program form. Does anyone know of such a company? Can your ideas be trusted that the company will say “Nahh” and then go and make it and market it themselves? If I find a company to create a prototype of the software, where do I go from there?
Any advice is truly appreciated.
Tom
—————
Hi Tom,
I’ll approach this differently, with our testimonial. Sometimes a story can paint a better picture than theory…
About 5-6 years ago I was in your shoes. I’m not a programmer, I was in advertising (15 years exp) and had a great idea that ‘All designers in the world could use to manage their staff, projects, tasks and time’ (based on my vast knowledge of all designers in the world of course – ha ha).
So my wife and I hunted out a developer to team up with, built the product, put up a website, did some marketing and waited….
and waited…
and waited..
and waited.. “No sales… No leads… Nobody knew we were alive or even cared… and the ones that tried it, just weren’t interested!”
Finally, we came to the conclusion that perhaps we should have done some market research (Hard Lesson no.1).
I spent a few months just talking to industry contacts, showing the product, getting feedback etc and the overwhelming feedback was that the product wasn’t good. It had too many ‘Wants’ built in and not enough ‘Needs’.
Below is a small mention ProWorkflow had in a good article. The full article can be read here:
http://www.graphics.com/modules.php?name=News&file=article&sid=2928
………..”In contrast, when ProActive Software’s ProWorkflow launched in 2002 it originally targeted small software development houses. While its client list has grown to include firms such as Disney, its focus is still small- to medium-sized businesses, many of them in the creative sector. One of ProWorkflow’s strengths is its customizability, ranging from modest possibilities using its hosted version through to total control via the availability of its Cold Fusion code base.
Web-based project management solutions offer those responsible for managing projects the tantalizing prospect of no longer being always on call to move things forward. While this is a position some might find uncomfortable, the re-definition of the role this makes possible is attractive to others.
Karl Fountaine, of Fountaine Design, a New Zealand-based three-person shop providing graphic design and advertising services, uses ProWorkflow to manage project workflow. For Karl, part of the appeal of such a system is that, “I now know if I have to leave the business for any time my staff will know exactly what work is in progress, and when it is required – my business no longer relies on me being there every minute of the day.”
The biggest problem we encounter and always seek to improve is “Knowing What Works” (and what doesn’t).
In order to get the best ‘bang for our marketing buck’ we’d invested heavily in developing systems to measure metrics and conversion rates etc. Without a way to measure results, you’re just blindly throwing away your marketing dollars. We use affiliate tracking links to manage the results of our campaigns and have built systems to count daily signups and activity.
Here’s some examples of the items we track daily from marketing effort:
- How many visitors came to the website from a campaign
- How many signed up for a trial account
- How many trial account holders contacted us directly
- How many purchased a code download
- How many signed up for a subscription account
For example (not real figures):
- 2500 visitors came to the website from a campaign
- 250 signed up for a trial account (10% conversion to trial)
- 35 trial account holders contacted us directly
- 9 purchased a code download (0.36% conversion to code purchase)
- 12 signed up for a subscription account (0.48% conversion to subscription account)
And here’s the deal…
If the revenue generated from the 0.84% total conversion is greater than the cost of the campaign, then that’s great! Spend more!
A few weeks ago, I was attending a black-tie event in Christchurch, New Zealand for the local Business Awards. I had been nominated for the business awards (for ProActive Software), and shortlisted to 8 out of about 50-80 businesses that were nominated from our local area. The evening was great, food was fantastic, the ‘transvestite’ stage show amusing, but the definate hilight of the evening was getting to meet our country’s Prime Minister, Helen Clark (she has a great handshake).
Helen was handing out the awards, and whilst I didn’t win, I did receive a certificate. but… I digress…
The real reason I enjoyed the night was that I got to shake Helen Clark’s hand and congratulate her on breaking up Telecom (Our nations’ monopolistic telecommunications provider). Finally, now Helen’s busted Telecom, New Zealand should get some decent competition between the other internet broadband companies.
Hopefully better speed of access in the local loop! About time!
