Things I have Learned – Multi Part

I have been speaking with Peter Vogel (The VistaDB Story) for his blog on Visual Studio Magazine.  It is apparently quite uncommon for a company going through what we have to be so open and transparent about the process. 

I have been spending a lot of time lately packing, fixing up things around the house, etc (too much time to think).  I have a couple of things I would like to blog about.  These are things I would have done differently, or things that I would like to pass on to other small business owners. 

Micropreneur Academy

First, if you are a small shop that doesn’t have a lot of people to mentor you or bounce ideas I highly recommend you sign up and participate with the Micropreneur Academy.  This is a fantastic site for individual startups to learn, bounce ideas off others, find a mentor to help you through troubled spots, and lots more.  They have a very unique training system that breaks things up into lessons, and then activities for you to perform.  I have found them to be extremely high quality.

Totally Revamp Pricing

The pricing model is such that you MUST be able to make money on what you sell now, not next year.  You can't count on people to renew their subscriptions.  The entire subscription model was a huge loss.  As a small company you can't afford that type of mistake.  I was assuming (bad word) that 50% of people would renew for 2-3 years.  The reality is only 5% renewed.   You have to ensure that you can support yourself on the revenue model.  I was thinking economies of scale would kick in, they don't.  You can't count on it, so don't put it in.  Charge higher and get fewer customers you can afford to support better, rather than lower price with lots of customers.

Joel Spolsky has talked about this quite a bit, but when I took over the company there was a pricing model in place and I didn’t want to change it.  I should have done it from day one, and just lived with the dip in sales at that time.

Charge a Premium

You have to be able to charge what it costs you to build something, or you can’t stay in business long.  People always want the cheapest thing possible, then they expect Nordstrom level customer service. 

One customer complained loudly about how we didn’t solve his issue and he was charging his customer $500,000 for this project.  He only spent $299 with us, and apparently we were the key to what he did.  Why not spend some of that budget on consulting with us if you need something, I asked.  No way, he already paid for the product and should not need consulting.

To Be Continued

I have several more of these, I will continue them in future posts.