Board index » delphi » Do you make money by selling code or support?

Do you make money by selling code or support?


2004-05-19 06:43:27 PM
delphi67
After thinking about the responses I got from my question about IP, and
looking at our revenues, I got a bit of a shock!
It seems that our little company makes most of its money by providing
support services to our customers, and we can (almost) afford to give
our code away for free!
This shouldn't surprise me, but it does. As a coder, I like to think
that there is value in the work that I have done, and I tend to react
badly to ideas from the marketing department that don't show the profit
generated from selling licenses or contract hours.
I'm sure that this is no news to those who work in the open-source area,
but I am really surprised about the numbers in our closed-source
environment.
I've recently been forced to look at revenue on a company-wide scale
instead of focussing on revenue from the code that we provide, and have
found that we make 90% of our money from support.
No matter how good your code is, there's still money to be made from
having someone available to answer calls like this:
Customer: "The computer is telling me that my printer is switched off"
Support Person: "Is your printer switched off?"
Customer: "Yes"
Support Person: "Switch the printer on then"
Customer: "OK, thanks, its working now..."
Support Person: ...writes up a call charge to the customer
I am not making this up. I am just concerned that many who frequent
this newsgroup are so focused on code that they miss the chance for
making good money on support. I know that I have missed out in the
past. I guess I will have to include a "stupidity" element in my budgets
from now on....
Even with this level of foolishness, by providing a support resource,
the customer ends up being happier with our solution than with that of
our competitors. They WANT (and are prepared to pay for) people who can
answer silly questions. In this case, the bottom line is that the user
got the printout that was required.
Don't let the numbers people judge you solely on your production. Make
sure that they judge your profitability on the entire revenue
opportunity that your code creates.
Scout
 
 

Re:Do you make money by selling code or support?

unfortunately only a handful of developers are ready to pay for support for the
components they bought ;)
otherwise i agree with you. look at most business solutions that get sold.
one-off payment and 12-30% yearly support contract...
--
Hannes Danzl [NexusDB Developer]
Newsgroup archive at www.tamaracka.com/search.htm
 

Re:Do you make money by selling code or support?

I agree
I am a {*word*137} programmer and at least a third of my income is from those
type of questions ("How do I turn the printer on")
G
"Scout" <XXXX@XXXXX.COM>writes
Quote
After thinking about the responses I got from my question about IP, and
looking at our revenues, I got a bit of a shock!

It seems that our little company makes most of its money by providing
support services to our customers, and we can (almost) afford to give
our code away for free!

This shouldn't surprise me, but it does. As a coder, I like to think
that there is value in the work that I have done, and I tend to react
badly to ideas from the marketing department that don't show the profit
generated from selling licenses or contract hours.

I'm sure that this is no news to those who work in the open-source area,
but I am really surprised about the numbers in our closed-source
environment.

I've recently been forced to look at revenue on a company-wide scale
instead of focussing on revenue from the code that we provide, and have
found that we make 90% of our money from support.

No matter how good your code is, there's still money to be made from
having someone available to answer calls like this:

Customer: "The computer is telling me that my printer is switched off"

Support Person: "Is your printer switched off?"

Customer: "Yes"

Support Person: "Switch the printer on then"

Customer: "OK, thanks, its working now..."

Support Person: ...writes up a call charge to the customer

I am not making this up. I am just concerned that many who frequent
this newsgroup are so focused on code that they miss the chance for
making good money on support. I know that I have missed out in the
past. I guess I will have to include a "stupidity" element in my budgets
from now on....

Even with this level of foolishness, by providing a support resource,
the customer ends up being happier with our solution than with that of
our competitors. They WANT (and are prepared to pay for) people who can
answer silly questions. In this case, the bottom line is that the user
got the printout that was required.

Don't let the numbers people judge you solely on your production. Make
sure that they judge your profitability on the entire revenue
opportunity that your code creates.


Scout

 

Re:Do you make money by selling code or support?

Scout writes:
Quote
After thinking about the responses I got from my question about IP,
and looking at our revenues, I got a bit of a shock!

It seems that our little company makes most of its money by providing
support services to our customers, and we can (almost) afford to give
our code away for free!
[snip]
To start with, without your code, there would never a customer
call for a printer to be installed. And that makes your work
valuable then.
Rene
--
Ing.Buro R.Tschaggelar www.ibrtses.com
Your newsgroups @ www.talkto.net
 

Re:Do you make money by selling code or support?

"Scout" <XXXX@XXXXX.COM>writes
Quote
After thinking about the responses I got from my question about IP, and
looking at our revenues, I got a bit of a shock!

It seems that our little company makes most of its money by providing
support services to our customers, and we can (almost) afford to give
our code away for free!

This shouldn't surprise me, but it does. As a coder, I like to think
that there is value in the work that I have done, and I tend to react
badly to ideas from the marketing department that don't show the profit
generated from selling licenses or contract hours.

Scout,
You obviously need both. Without the software, you wouldn't have the
revenue from the support (as you are probably very aware).
What your experiencing is that your software product is being commoditized.
There is an excellent article on JoelOnSoftware about the trend you are
witnessing in your company.
www.joelonsoftware.com/articles/StrategyLetterV.html
Steve-O
 

Re:Do you make money by selling code or support?

"steve-o" <XXXX@XXXXX.COM>writes
Quote
What your experiencing is that your software product is being
commoditized.
What a surprise. Why would people pay for a product that they can get for
free?
Software developers are committing hari-kari using knives that say "Open
Source" and "Freeware" right on the handles. What luminaries.
 

Re:Do you make money by selling code or support?

"John Jacobson" <XXXX@XXXXX.COM>writes
Quote
"steve-o" <XXXX@XXXXX.COM>writes
news:40ab9571$XXXX@XXXXX.COM...
>What your experiencing is that your software product is being
commoditized.

What a surprise. Why would people pay for a product that they can get for
free?
That should say, "Why would some people pay for ...". Free alternatives do
not totally destroy the ability to sell product, they just undermine it
greatly.
 

Re:Do you make money by selling code or support?

Agree wholeheartedly. IMNSHO, software's downfall is that geeks with no
money and no life (no job, no dependents, living with mommy and daddy) can
write code, and worse, are inclined to do so. But to do so, they need free
tools. Then, when their work is done, they think that they are being noble
or morally superior by releasing it as OpenSource or freeware. After all,
they don't need the money and they can not run a business, "So why not?", they
think.
There's just so little fairy dust left to sprinkle in this business.
 

Re:Do you make money by selling code or support?

Scout writes:
Quote
No matter how good your code is, there's still money to be made
from having someone available to answer calls like this:

I am not making this up. I am just concerned that many who
frequent this newsgroup are so focused on code that they miss the
chance for making good money on support. I know that I have
missed out in the past. I guess I will have to include a
"stupidity" element in my budgets from now on....
As it happens, yesterday our block lost power due to a substation
fire or something. The emergency genny kicked in, so we had a
light every 15 feet or so, but no normal electrical power to the
cubicles. I actually had to tell my user to stop hitting the power
switch on his computer. Perhaps the fact that he was peering at
the case to try to identify the correct bump to press would have
clued him in that the power had failed? Or perhaps he thought his
big desktop computer ran on batteries, hamsters, or fairy dust?
My "business" is running an internal IT service function for a
government department. The most important thing I can provide is
service - making my Department's users feel like someone is making
their computers work for them, rather than against them. The
specific code, applications, or anything else is worthless without
it solving a business functional problem.
If this were a commercial type environment, there'd be a base fee
for access to the application. Then the self-service folks would
be off doing their own thing, but the customers who want some nice
hand-holding would be paying nicely to receive that hand-holding.
Given my experience around here (and in the private sector prior),
your 90% support revenue estimate is right on target. that is also
why HP, IBM, and everyone else have been working on their services
arms.
-Brion
 

Re:Do you make money by selling code or support?

At 12:43:27, 19.05.2004, Scout writes:
Quote
Do you make money by selling code or support?
No. <g>
--
Rudy Velthuis (TeamB)
"Grove giveth and Gates taketh away."
- Bob Metcalfe (inventor of Ethernet) on the trend of hardware
speedups not being able to keep up with software demands
 

Re:Do you make money by selling code or support?

"BOB-O-MATIC" <XXXX@XXXXX.COM>writes
Quote
Agree wholeheartedly. IMNSHO, software's downfall is that geeks with no
money and no life (no job, no dependents, living with mommy and daddy) can
write code, and worse, are inclined to do so. But to do so, they need
free
tools. Then, when their work is done, they think that they are being
noble
or morally superior by releasing it as OpenSource or freeware. After all,
they don't need the money and they can not run a business, "So why not?",
they
think.
But there's more to it than that. Most employers ask: "can you code" and
"how well is your code selling" so many programmers find it necessary to use
free software as an advert for their skills and as a way of impressing
employers, when they haven't had an employer before.
Some people write software for fun and as a hobby. Look at Linux - virtually
everybody in Linux does it for fun.
--
Yours
Rhys
Join the anti-spam project:
groups.yahoo.com/group/Anti-Spam-Development/
or view my website:
www.sageworld.org
"Linux - an operating system that wants to work.
Windows - an operating system that mostly works.
Mac OS - an operating system that really works."
 

Re:Do you make money by selling code or support?

Quote
They WANT (and are prepared to pay for) people who can
answer silly questions.
I generate most income from sales of software programs which is increasing
by the way each year in part, I believe, because the products come with a
reasonable amount of free support. I have had people say they very much
appreciate the idea they get more than just a software product, but a
software product AND a company willing to support its product once it is
out the door for the price paid. This free support is for the most part
not abused by users. I have never had a customer ask basic questions
about their computer, and since support is free, even if they did I would
probably direct them to a computers for dummies book instead of wasting
time holding someone's hand. I can then concentrate on what I enjoy
doing, not what I do not enjoy: i.e. telling people to plug in their
computer. But that is just me.
Cheers,
Kevin
--
Using M2, Opera's revolutionary e-mail client: www.opera.com/m2/
 

Re:Do you make money by selling code or support?

Quote
Software developers are committing hari-kari using knives that say "Open
Source" and "Freeware" right on the handles. What luminaries.
I do understand what you mean, but this is not necessarily always the case
if done correctly.
Using the right market strategy, giving away free software can allow you
to break into a market that would otherwise be closed if you tried to get
paying customers for all your products initially. When someone who uses
your free software needs another software product, or one with more
advanced features, they already will think of your company as they will be
comfortable with the user interface (if there is one) and company
support. Many of my customers "upgrade" in the manner.
The trick is to lay a trail of crumbs without giving away the full cake.
Kevin
--
Using M2, Opera's revolutionary e-mail client: www.opera.com/m2/