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Saturday, May 09, 2015

Thoughts on assessing project money potential

To me one of the weirder questions with doing a software project or application is: where is the money in it? Often the answer is that there is none, but why? So I sat down and did lots of my own analysis to come up with my own opinions and now I'm going to see what I can do with them in the real world.

Nothing like trying out ideas, but of course they could fall flat. So there's the disclaimer that these are opinions and I'm not claiming to be a money expert. Just some guy on his blog talking out some things.

Money to me is an abstraction enumerating value for a favor. And I use that word "favor" deliberately as it helps explain why money is normally not used for things most important to us, which leads to an apparent paradox where people routinely refuse to pay for things most valuable to them. There are posts covering all of the above and will not link to them here.

So, functionally, I say that the more important an application is likely to be to people the less likely they will pay for it. So if I were money focused and looking for direct sales on an application for the consumer market, I would look for something less important, like games.

I think businesses are different, and actually behave more like you'd think, where a business is more likely to pay more for something important to it, and the business to business market would be where I'd go with an important product then.

However, even in an important area to most people I'd think I could produce a product, and give it away, and look for revenue in other areas, like advertising or related services--though seemingly paradoxically the MORE important the services the LESS likely people will be willing to pay for them!

So, yup, I figure if I provide a free product that people find extremely valuable to them, they will refuse to pay for it, and if I have related services they find crucial, they will refuse to pay for those as well!

This behavior can seem strange unless you figure it out. And again, businesses do not behave that way, but that can be weird for them as well.

As consider phone service in the US, with which I'm most familiar. People do pay for it, but when I grew up, long distance was more expensive. And could be prohibitively expensive which infuriated people. There was a lot of hostility about long distance rates.

But notice today! However, companies were probably more at ease I think about paying the business cost of long distance, and could lag behind consumers in switching to far cheaper rates. Or, to the ultimate, finding ways to not pay for communicating long distance at all, which the web has allowed. I'm guessing. Not going to check that one, but will leave it up as a speculation.

So, what's the short answer for why people refuse to pay for things most important to them?

Community.

Like, imagine you live in a community where you have to pay a fee to leave your driveway to drive on the road. And in fact, every time someone does anything for you, you get charged.

So, you ask your neighbor to watch your house when you're away? You get a bill.

Your kid stays over at a friend's house? You get charged an overnight rate. Oh yeah, plus a meal rate if they eat.

I could go on. Communities offer a LOT where money is not involved which is not surprising as community has been around since long before money was invented.

You find a cure for cancer? Would you charge a HUGE fee for it?

If you would, there's something wrong with you.

Businesses are not human beings though. Which is why you can charge a business based on the perceived benefit to that business, in my opinion.

It's also one reason why businesses may behave in inhuman ways, like try to charge people exorbitant fees for, yup, a treatment for cancer.

Who is right? Well, we are of course! People rule.


James Harris
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