I run product development for a toolkit company that exited to a public company in 2011.
Our .NET and Java toolkits sustain a 25 person division with healthy margins and decent growth.
The keys have been:
* make something valuable and charge enough for it so that you can offer great support. If you charge $500, you lose money if anyone calls you -- instead you should want people to call you -- so, charge enough money to make that worthwhile.
* have ways that make the engagement scale. Meaning, it's ok if an average deal is 5-10k, but if someone gets a lot of value, you should want that to scale up to 100k or more
* you can charge like a Saas for things that are not delivered like Saas, and some people prefer it. Meaning, we sell .NET assemblies (not a hosted service), but you can pay xx,000/year for it if you want unlimited deployment.
* You have two segments (broadly) -- companies that make software for themselves -- companies that sell software. They have different needs and get value in different ways -- think about segmentation to price appropriately.
You will be competing against free -- so you need to deliver value. Don't look for markets with no free alternatives. I compete against a ton of open-source very well. We're better and we have support.
Our .NET and Java toolkits sustain a 25 person division with healthy margins and decent growth.
The keys have been:
* make something valuable and charge enough for it so that you can offer great support. If you charge $500, you lose money if anyone calls you -- instead you should want people to call you -- so, charge enough money to make that worthwhile.
* have ways that make the engagement scale. Meaning, it's ok if an average deal is 5-10k, but if someone gets a lot of value, you should want that to scale up to 100k or more
* you can charge like a Saas for things that are not delivered like Saas, and some people prefer it. Meaning, we sell .NET assemblies (not a hosted service), but you can pay xx,000/year for it if you want unlimited deployment.
* You have two segments (broadly) -- companies that make software for themselves -- companies that sell software. They have different needs and get value in different ways -- think about segmentation to price appropriately.
You will be competing against free -- so you need to deliver value. Don't look for markets with no free alternatives. I compete against a ton of open-source very well. We're better and we have support.