Subscription service: how to price it? What to avoid?
February 5, 2013 10:27 AM Subscribe
I have an opportunity to develop a CMS-type web service for a franchise where I will charge ongoing monthly subscriptions instead of an upfront development fee. They have been burned by two failed projects already; I have no interest in selling my hourly labor beyond my day job; hence the subscription idea. I am excited about this opportunity (yay residuals!) but I want to be really careful not to bite off more than I can chew.
posted by rada to Work & Money (8 answers total)
Background: There will be 100-500 users (almost 100 today and growing); each is required to pay this monthly subscription for as long as they own a franchise. I am an experienced developer and can easily cover everything from programming to hosting. Assume there are unavoidable businessy reasons to develop custom.
Can you help me think of potential gotchas? I am talking specific points to include in my bid as well as the subsequent contract.
1. Scope of work. I know how to lock down the initial scope but how to deal with future enhancements given I am not charging by the hour? I am ok with ongoing work - my husband is a franchisee so I am committed to making this into an A+ product - but how can I make sure it doesn't get out of control?
2. Pricing. Subscriptions are pegged at $25/mo with no room for negotiation. There is possibly room to charge a flat fee for hosting. Customer support will be extra per hour-on-the-phone. Does this seem reasonable? Am I forgetting anything?
3. Price adjustments. How do I go about periodically raising my subscription fees in a way that's equitable to both sides?
Lawyer referrals are welcome however keep in mind that I will not be retaining one until my bid is accepted, so I need advice regardless!