[thelist] development time cost on new functionality

[Matt Warden]

On Fri, Jul 15, 2011 at 8:51 AM, Bob Meetin <bobm at dottedi.biz> wrote:
> but no way will they pay full price.

Huh? Again, I ask why. Your first customer was willing to pay full
price. It sounds to me like this is a problem with your thinking, not
theirs.

And just to screw with your brain even more, most products that come
about like this... where the development is largely funded by a
services project... they usually GO UP in price once it is productized
and sold that way.

> This doesn't go over well with many/most of my small business owner clients.

What doesn't go over well? That you have a product that solves their
problem at the same price as a consulting engagement, except there is
no risk of going over budget or beyond the timeline or that it will be
a failure altogether? Again, if you are having these discussions with
clients and they aren't going well, you should consider how you are
framing it. There is no reason why a customer would prefer you to
spend months on a consulting engagement that might not pan out vs
getting a productized version of the proven solution immediately.

> The answer, I feel, is situationally dependent. Some of this may depend on
> how deeply you can dig in your heels, take a stand.

I think it depends more on whether you can transition your mindset to
sell a product. Most services people, I've found, cannot. Your
development time has nothing to do with the purchase price (except as
providing a min). It is IP you are selling to solve the customer's
problem, and your price depends on how they value solving that
problem. If anything a product should sell at a premium to an
equivalent services solution.

Now where your ongoing development costs DO come in is in annual
maintenance fees (18-22% of purchase price, annually), assuming you
charge them. Which you should.

-- 
Matt Warden
http://mattwarden.com


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