Making money with a product: a myth? | Hacker News Reader

Making money with a product: a myth?

joel.is

100 pointsjoelg8730 comments

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.

"Because I know how to write (almost) everything myself, it seems funny to pay for it"

Shit. If I had your talent I'd make a fortune. This is exactly why good programmers need to team up with biz guys.

And yet many programmers looking at this path (myself included) have that exact mindset.

I still find it amazing what software people pay for, even knowing that my mindset is wrong. Add in free/open source software and you will find the average developer attaches little monetary value to most software they create.

"what software people pay for"

They aren't paying for software they are paying to solve a problem (at least in the case of business software). That is where the value is.

Even with free or open source that comes at the cost of knowing how to operate it and even get it working on your machine in many cases.

What people (who are not tinkerers and even tinkerers that don't have the time) want is to not have to think. Let's say they want to have some free software working on a cpu that doesn't have it. They don't want to spend the time to read anything and install anything. Everything takes time. They would rather just pay someone and be able to get started (maybe even with a little hand holding). That is where someone can make money.

If you can write anything that can automate any process people will pay you for it and they should. You have solved a problem for them.

A programmer having this mindset is reminds me of Turing Completeness.

Once you reach a certain point as a programmer, you feel like you could do anything in the space of things that is possible to do. It just takes an unbounded amount of time. Anything you don't know you could learn given sufficient motivation to do so.

It may not actually be true however.

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.

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).

While more products in a market does make it less likely that a new competitor will gain share, the fact that free tools exist to do almost any coding-related activity so significantly lowers barriers to entry that it seems very likely that the net effect of open source is lower barriers overall.

In any case, I'm not sure that the existence of competitors can be considered a barrier to entry.

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.

I didn't intend to brag, because I'm not a particularly good programmer. I only mean that, once you've taken the "Compilers" and "Operating Systems" classes in college, there's really no mystery left.

You are absolutely correct that it would take me a long time to do any of it. (I'm also bad at estimating how long things take, BTW!)

Then again, for most big polished software I use, I don't use most of its features ever. There may be icebergs, but chances are most of them are in code that I wouldn't write in the first place, if I was only writing for myself.

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.

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!

This post was pretty popular three months ago on HN: http://blog.codiqa.com/2012/03/from-yc-rejection-to-10000-us...

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

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/

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.

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?

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.

Wow, that was totally unexpected. Thanks!

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....

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.

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.

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.

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.

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.

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.

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.

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

>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?

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

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?

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