[thelist] development time cost on new functionality

Chris Dorer cdorer at gmail.com
Fri Jul 15 08:37:25 CDT 2011

I lean with Matt a bit more.

I'm trying to figure out in my current stage of business thought why there
is a difference between a company that has stopped working with accounts
that are less than say....  $500,000 and those who have yet attained one of
those accounts.

My current thinking has come up with:
The product you provide those companies saves them operations costs over the
years.  There is no reason not to charge them a one time yearly operational
cost if you save them that yearly cost over the next 5 years.

Incrementally build that revenue over time and you'll be able to grow
savings wise and company wise, over which more time invested into R&D should
return more back to you.

Just my two cents.

On Fri, Jul 15, 2011 at 8:51 AM, Bob Meetin <bobm at dottedi.biz> wrote:

>  Why?
>> Does Ford sell the second car it produces at slightly less? Does
>> Pfizer sell the second bottle of pills at slightly less?
>> This is a common mistake for services guys who aren't used to fixed
>> costs. When you sell the second time, that isn't a service. It's a
>> product (or "solution", if you prefer). You are not selling your time.
>> You are selling something that solves their problem and your cost to
>> implement that solution provides only a floor to your price range.
>> Now you absolutely do not want to bid the second project on an hourly
>> basis. That will either leave a ton of money on the table, or leave
>> you in ethical soup. Fixed price. And say it as if you're doing them a
>> favor in structuring it that way to give them some budgetary
>> certainty.
> I think the balance is somewhere in between. When Ford manufactures that
> first car there is some gamble involved, development, engineering, marketing
> costs. If they charged the first, then successive buyers, for that overhead,
> then Ford would have vanished years ago.
> Yesterday I spent much of the day building bridge between a Joomla gallery
> component, Phoca Gallery and the jquery-lighbox application that was
> recommended for other reasons last week. Nothing like it that I know of
> existed. It greatly facilitates administration.  I can see how reusable it
> will be, but in working with my regular small clients few if any would be
> willing to pay/license if at full price.  For the next customer it's all but
> ready to use. Should they reap the benefits and get it for 30 minutes
> installation time, I don't think so, but no way will they pay full price.
> This doesn't go over well with many/most of my small business owner clients.
> In a corporate environment I can envision a little more wiggle room. Does
> the average corporate employee apply as much as 50% work time at work?
> The answer, I feel, is situationally dependent. Some of this may depend on
> how deeply you can dig in your heels, take a stand.
> Bob Meetin
> dotted i - http://www.dottedi.biz
> LinkedIn: http://www.linkedin.com/in/**bobmeetin<http://www.linkedin.com/in/bobmeetin>
> 303-926-0167 (home/business)
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