
Making money with a product: a myth? - joelg87
http://joel.is/post/25021580513/making-money-with-a-product-a-myth
======
ken
I think this might actually be harder for programmers, at least with respect
to software. Because I know how to write (almost) everything myself, it seems
funny to pay for it, even in cases where logically I know it would save me far
more time than it costs me in money.

I paid for a commercial graphics program this week, and it was really hard for
me to do, even though I know it will save me time. All I see are the
(relatively few) bugs, and all I can think about are how I would have done it
better.

This could also be why "dev tools" are such a tarpit: at a certain stage,
everybody realizes "I can write an XYZ!" (where XYZ = bug tracker, blog
publisher, text editor, ...). The flip side is that if your target audience is
programmers themselves, they'll be less likely to pay you because they know
how to do all this, too.

The people I've seen with the most success are those who sell to the people
furthest from those who can do it themselves. If I were starting a restaurant
I wouldn't try to market it primarily to chefs.

~~~
wensing
I have no reason to doubt your talent, but I have an aversion to the "I could
do it myself" argument. What does that even mean? You could do it yourself if
you had a year to work on it? 10 years? A lot of software contains code
icebergs which render this "I could create this myself in a [insert short time
period]" thinking moot.

~~~
nadam
Yes, doing it yourself in a short time frame is not realistic in most cases.
The real 'problem' are those people who make free software as a hobby. They
write these softwares for years (sometimes with more free time than I would
have if I would decide not to sleep at night at all), and this raises the
barrier to entry for those who want to create paid products (for example
bootstrapping on the side, with a family to support).

~~~
wensing
You should be able to differentiate yourself from those projects by focusing
on something full-time and adding your unique expertise to the mix. You are a
unique human being, after all. If you can't, you shouldn't bother.

I created Stormpulse while bootstrapping on the side with a family to support.
Ultimately the competition became irrelevant because it's an
extension/expression of myself which can't be easily duplicated and provides
immediate differentiation.

------
yesimahuman
Great post, I've blogged a bit about my personal realization with this as
well. I didn't believe people would pay for things at my first startup two
years ago. I thought we had to convince big companies that had huge budgets to
pay for our product, not regular people.

Then, I went to work at a startup that actually made good money on a "virtual"
product for regular people. I was just blown away that people would pay for
something like that, and I learned in aggregate how much value a small
purchase or monthly subscriber could have, even if the segment of users that
paid was small.

With my new startup I knew if we put a price on it and charged, enough people
would pay to keep us alive. Here we are just a few months in, able to pay
ourselves and go full time on it. It's so empowering. I will be hesitant to do
"free" or even "cheap" ever again after this.

~~~
chubs
Please - you've got my attention with:"Here we are just a few months in, able
to pay ourselves and go full time on it".

Tell us more about it! What are you doing, how did you market it, how did you
find customers, please!

~~~
yesimahuman
This post was pretty popular three months ago on HN:
[http://blog.codiqa.com/2012/03/from-yc-rejection-
to-10000-us...](http://blog.codiqa.com/2012/03/from-yc-rejection-
to-10000-users-in-1-month/)

That explains a lot about our growth after launching. I did respond to your
email, Thanks!

------
teuobk
The first product sale is euphoric and a bit magical. "Holy cow, somebody
actually paid me for something I built!"

I just had my first sale of my software this past weekend, and it was
fantastic: <http://www.keacher.com/1060/how-i-got-to-my-first-sale/>

~~~
larrys
I took a look at your product. You should concentrate some marketing on
forensics (as per one example on your site). You might even want to try some
(gasp) direct mail for that giving samples for free to police departments. You
can probably produce a better version for them and charge more they have
budgets obviously.

~~~
teuobk
I've toyed with the idea of marketing a police-forensics version, but
honestly, direct mail never came to mind. Is there a specific reason you
suggest direct mail for advertising to police departments?

~~~
larrys
Yes but what I just did was send an email to a person at a police department
that we do business with (I don't know them) to see what they think of your
software. (All things start with research and I don't want to give you info
w/o doing research).

Here is the email that I sent. I will reply to you personally with the results
(if any since I don't know that they will respond) or on HN if the response is
interesting enough for others to learn from.

Here is the email that I just sent:

"As you know we are the [redacted business relationship that we have with this
police department]

I am helping a programmer with analyzing the business potential of a software
program they developed that helps police departments with forensic analysis of
photographs.

I was wondering if you could have the person or persons who would use this
software (it enhances photos taken removing blur) take a look and give me
their opinion of whether the software is something they could use and if it
would be something they would consider purchasing (whether the price is
appropriate for the benefit).

If they would like to test the software I can get an evaluation copy at no
charge."

My purpose in sending this letter is to get a general idea of how they view
your product. It's only one data point obviously but from their response I
will be able to gauge how you should proceed forward and possibly specific
suggestions.

~~~
teuobk
Wow, that was totally unexpected. Thanks!

------
spiredigital
Interesting post, Joel, but I have to say this isn't a problem I struggle
with. For example:

'$10 seems like a lot of money. It can feel unimaginable people will hand over
$10'

Really? If something will save me even a few minutes on an ongoing basis - or
provide a bit more value - $10 is a pretty small price to pay. For example:

\- $7 / month for Github \- $29 / month for Kiss Insights survey tool \- $50 /
year for Crashplan

...and these are just a few. I'm a bit more on the business / marketing side
of things than development, so I likely have a different mindset. But I'll
happily pay for great products that make me more efficient or save me time....

------
jp
Making money with a product is easy. Staying cash flow positive is not.
Selling $10 for $5 works great as long as you have money to burn. But then
reality sets in and as you point out "profit" becomes the keyword. My best
guess is that people pay to solve annoying problems faster.

------
nadam
In my opinion you have to overcome at least one of two obstacles to make money
with a product:

\- Either know an interesting domain / niche-market which is not known by
thousands of other developers (This is suprisingly hard for me)

\- Or you have to work your ass off / be very smart to create something which
is significatnly better then the free alternatives. Because, most of the time,
there are free alternatives, and most of the time they are good enough.
Sometimes they are not just good enough, but they even have enthusiastic fans.

(The third alternative is to create something so innovative that has no
competitors, but there is a huge risk that the idea is just not good enough,
there is not enough user need for it)

I am working on a markdown editor for windows (in fact multiplatform,
developed in Qt), which no doubt will be the best in its category. The
question is not that whether will it be the best or not, the question is this:
Is the free alternative good enough? The answer is not trivial.

------
ctdonath
A lot of the religious arguments over Apple amount to "it just works so I'm
willing to pay more" vs "you just ____ and you'll pay less". The author
discovers what Apple knows: make it simple, make it work, and make it save
customers time and they'll fall over themselves handing you money.

------
dpeck
Just getting over the myth myself. We launched a little project a few weeks
ago, servicing a very niche market that seems to like spending money on the
service.

I was amazed when my partner pitched it to me, but after a little research we
launched with about 40 hours of coding. First "big" day of stripe transfers
hitting my account tomorrow and I'm damn near giddy. Probably not ever going
to be anything more than a few hundred bucks a month, but its a nice little
ATM and seems like its going to be on autopilot with the next code update with
maintenance needs of just an hour or two a week.

------
apinstein
Setting price based on time savings limits the perceived value of your product
since for most people they set the opportunity cost of their time pretty low.
It might work better in a b2b sale where the opportunity cost is higher.

What you really want to do is provide value by letting customers do something
that is otherwise impossible or painful.

For instance buffer lets you sleep while you tweet. That is much more valuable
than saving time.

There is a guy on twitter (@pricing) that talks about pricing, go read a few
hundred of his tweets and see it helps you get your mind wrapped around
pricing better.

------
words_fail_me
I had to leave the software development world for a few years to see clearly
why people were willing to pay for software as a service for seemingly simple
things like keeping track of their contacts (think 37 Signals' Highrise) since
I always had the "well, I can build that myself" mentality.

I found myself on a team of (non-IT) consultants all billing $150+/hr and
suddenly that $20/50/100/whatever per month SaaS charge is absolutely
meaningless. It's really _nothing_ to the company. It just doesn't even
register as a "real" expense.

------
alexro
You can turn up a quick buck sure. I've done that: shareware and websites. But
how about long term product development? Not so easy. Maybe it's better to
secure your place on the consulting market where the money are real because of
all crazy stuff going on inside the big corps. I still don't know.

------
cdooh
The main problem, I think, is how to ask for money and knowing how much.

------
batista
> _He started to think about how he would achieve this, and realised that to
> make it the only thing he worked on, he’d need to make money from the
> product. He then thought about other products people pay for. He thought
> about products he pay’s for, and realised he doesn’t pay for products, or at
> least it was very rare for him to. He thought long and hard and tried to
> understand why anyone would pay for anything._

WTF does this even mean?

They had the discussion in a coffee shop. Have they paid for their coffee?
Their cake? While doing so, have they checked their mails in the phones they
had paid for, that come with contracts they pay for?

Were they wearing clothes that they had paid for? Did they carry paid-for
backpacks with paid-for laptops inside, each with several paid-for apps, from
Keynote to Microsoft Windows? Was the coffee shop furnished with paid-for
furniture and decorations?

~~~
dpeck
How about we assume he meant software products since that makes sense and
isn't stretching?

~~~
batista
How about this line in my post: _Did they carry paid-for backpacks with paid-
for laptops inside, each with several paid-for apps, from Keynote to Microsoft
Windows?_

