Ask HN: Organizations keep trying to give me money for a thing I made | Hacker News Reader

Ask HN: Organizations keep trying to give me money for a thing I made

7 pointsrianjs2 comments

tl;dr- How do you engage with VARs in a way that will get their attention?

In the last two years, several organizations has asked to license a medical spell check dictionary that I made years ago. After exchanging emails, I lost two of those, because I priced my product too high, and the third I landed (Indiana University School of Medicine), but I charged too little. (I'm OK with this, because it helps with credibility.)

I've got my pricing hammered out now, and I have a designer working on a home page, which should make it easy for individuals to buy. It comes with a real installer and works with Chrome, Firefox, and Windows & Office in a way that would be difficult to do by hand, and in a way that the competitors don't (despite their WAY higher prices).

- Much more competitive pricing

- Updates at a regular cadence with discounted yearly contract pricing. (= recurring revenue for me)

- Existing penetration is very high (tens of thousands of downloads), and most inquiries occur because their employees or students are asking for it

- Tooling geared for enterprises (deployable MSI)

- More features: works with all the major browsers, not just Windows/IE/Edge/Office

Well I got an email out of the blue the other day from a middleman in the UK who wants to license my product for use with computers that they distribute. (They're a distributors to other distributors, I believe.) They do quite a lot of disabled student allowance stuff, and they liked my pricing much better than the alternatives. I have a meeting with them next week.

They're VAR-ish, and it got me wondering how I could establish relationships with VARs here in the US as well. Do you have any advice on how to get the attention of a Staples or WB Mason or other VARs?

Assuming that $5.99 is a license that you get for each user...

- For outbound marketing and finding VARs, I'd do some research into the wide variety of software that hospitals and health care facilities use and then look into the channels they are purchased through. Follow the chain back to the devs and it is likely that one of those intermediate businesses would be interesting to talk to as a VAR candidate. Then it's a matter of phone, e-mail, tweet, or whatever works to get through and talk to them.

- For inbound marketing, your web site and standard SEO practices should suffice.

- Look for trade shows to attend both to identify software in the domain that could use your dictionary, and also identify VARs and distributors.

- If you find a large enough variety of companies to target, focus on the ones that are 2-5 times larger than your largest to date. I.e., try to catch larger and larger fish until you're knocking on the doors of the biggest catches. And in any case, don't be surprised if you catch the eye of someone in the largest ones who is willing to sponsor you at that business.

Once you've found them and they are interested in signing up...

- Be sure your VAR agreements give you solid protection and a clear way to terminate.

- Ask for an annual unit estimate.

- Require a minimum payment that represents an amount that is worth your time to support that VAR. Get that minimum payment at the beginning of the year. (sounds like you're getting recurring revenue for updates already, so maybe this is already handled)

- Figure out what it would cost for them to make it themselves or have someone else to make it for them. If they do a lot of business with you, at some point, a VP or GM is going to look at the amount they are paying you and say 'why are we paying so much for this, we should build it ourselves and reduce cost'. For example, if your feature took you 1 man-year to develop and a customer is buying 20,000 license/year, they are paying $100,000/year. They may figure they can pay someone to build it for them for $100,000 and see an ROI beginning in only one year.

- If getting 'designed out' is a realistic outcome, offer fixed annual pricing below that threshold (with payment at the beginning of the year), or, offer a buy-out where they pay a large amount one time and then a small annual fee for updates thereafter.

- If the revenue amount is large, look into copyrights and other IP protection.

- If there is a low barrier to entry, be alert for competitors. Bank a portion of the revenue. Be receptive to exiting.

Hope that is helpful.

Good luck!

> I'd do some research into the wide variety of software that hospitals and health care facilities use and then look into the channels they are purchased through

I've done a little of this, and it's surprisingly difficult. :)

> Follow the chain back to the devs and it is likely that one of those intermediate businesses would be interesting to talk to as a VAR candidate.

Hmm, this is an interesting idea. I bet systems like EPIC have use third-party subcomponents. It's quite likely that it would be less expensive for them to use my product than maintain their own. (If indeed it's an in-house effort.)

> For inbound marketing, your web site and standard SEO practices should suffice.

I'm already #1 on Google for most of the common search terms, using an anonymous browsing window. So I could do more of that, but I think partnerships is where the actual money is. I think selling to individuals will basically be small potatoes by comparison.

> focus on the ones that are 2-5 times larger than your largest to date.

Good idea. I have quite a few friends from pharmacy school that work for large pharmaceutical companies, and we're all old enough now that a lot of them have purchasing power. :)

> Be sure your VAR agreements give you solid protection and a clear way to terminate

Another thing to learn about.

> Figure out what it would cost for them to make it themselves or have someone else to make it for them. If they do a lot of business with you, at some point, a VP or GM is going to look at the amount they are paying you and say 'why are we paying so much for this, we should build it ourselves and reduce cost'. For example, if your feature took you 1 man-year to develop and a customer is buying 20,000 license/year, they are paying $100,000/year. They may figure they can pay someone to build it for them for $100,000 and see an ROI beginning in only one year.

This would be hard, because health care changes all the time and new words are quite literally invented daily. I have largely automated the ingestion and filtration of new words, but it does take a few hours of effort every week to keep on top of it. (At the end of the day, a human has to determine what's real and what isn't. There's a surprising number of typos and misspellings in peer-reviewed journals.) So it's not necessarily a set-and-forget, but the data gathering, normalization, and sorting basically is. It would make virtually no sense for even a very large company to develop this internally. In fact, most large companies don't pay for spell check software at all. (C.f.: lots of misspellings in peer-reviewed articles.) But there is a market for it. An EMR company was the first to contact me; I suspect they don't have existing solutions, because the alternatives are $60/seat and up.

I WAS thinking about an unlimited site license. Say you're an EMR company, and you have 300,000 licensed installations... you pay me I dunno $50K/yr max, and you can integrate it into as many instances of your software as you want. Exact figures would need to be thought about more.

> If there is a low barrier to entry, be alert for competitors. Bank a portion of the revenue. Be receptive to exiting.

I've thought about the exit angle. I would consider offers. But this is actually just a hobby. I have no intentions of quitting my day job anytime soon, because this project is so low effort. I wrote software to automate most of the annoying bits, and I wrote more software to make the annoying-but-cant-be-automated bits less annoying.

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