Starting a software side business... slowly
December 18, 2015 6:34 PM Subscribe
How should I sell an open-source web application if my goal is passive income?
I am a web developer at a non-profit organization.
A while back, I wrote a web application to solve a particular need, and word about it has gotten around.
Another organization asked officially if they could have or buy the program, and our administration turned them away. This was discouraging to me, as we are in no way competing for the same audiences or resources, and I would have liked for my code to be as helpful as possible.
A third organization is now coming directly to me* asking me to build something similar for them.
I plan to write a new, from-scratch version of the application on my own time, so conflict of interest is not an issue here.
I also want the software to be open source, both because it will be based on open-source tech, and because I feel indebted to open-source software for helping me get where I am today. I have no qualms about organizations with capable developers finding and running the program for free (especially because organizations like ours typically have more money than talent).
My question, then, is what business model do I pitch to this client that will allow me to re-sell the software to other clients, and will generate income as passively as possible?
Possibilities
- Sell support. This is out because I am satisfied with my current job, and cannot take calls and emails during business hours.
- Sell "maintenance"? Come up with some type of agreement that I'll answer non-end-user email in a non-immediate fashion, and apply updates to the software as they are written. Is this a thing?
- Sell training. Not as passive as I'd like, and probably very occasional (especially since they'd cost me vacation days), but a possible add-on service.
- Sell hosting. It's tempting to believe that this is more passive than a support load would be, but it is practically guaranteed to put me in an uncomfortable position during work hours at some point. It does likely have the highest actual and perceived value, though.
- Sell consulting. Charge a flat hourly fee to set up the system, as well as occasionally support, train on, and update it. This is probably the least passive option, and likely the lowest value proposition (as it would not be an ongoing fee).
- Sell "a license". It occurs to me that even though it is open, I could probably just charge them to use the software, with no support expressed or implied. This seems like a tough sell, though, and somehow... wrong.
I will be very grateful for any suggestions or advice!
* Well, I say "me", but actually my co-worker was the contact person who brought this opportunity to me. As such, he will be getting a cut of any of anything I make out of it.
I am a web developer at a non-profit organization.
A while back, I wrote a web application to solve a particular need, and word about it has gotten around.
Another organization asked officially if they could have or buy the program, and our administration turned them away. This was discouraging to me, as we are in no way competing for the same audiences or resources, and I would have liked for my code to be as helpful as possible.
A third organization is now coming directly to me* asking me to build something similar for them.
I plan to write a new, from-scratch version of the application on my own time, so conflict of interest is not an issue here.
I also want the software to be open source, both because it will be based on open-source tech, and because I feel indebted to open-source software for helping me get where I am today. I have no qualms about organizations with capable developers finding and running the program for free (especially because organizations like ours typically have more money than talent).
My question, then, is what business model do I pitch to this client that will allow me to re-sell the software to other clients, and will generate income as passively as possible?
Possibilities
- Sell support. This is out because I am satisfied with my current job, and cannot take calls and emails during business hours.
- Sell "maintenance"? Come up with some type of agreement that I'll answer non-end-user email in a non-immediate fashion, and apply updates to the software as they are written. Is this a thing?
- Sell training. Not as passive as I'd like, and probably very occasional (especially since they'd cost me vacation days), but a possible add-on service.
- Sell hosting. It's tempting to believe that this is more passive than a support load would be, but it is practically guaranteed to put me in an uncomfortable position during work hours at some point. It does likely have the highest actual and perceived value, though.
- Sell consulting. Charge a flat hourly fee to set up the system, as well as occasionally support, train on, and update it. This is probably the least passive option, and likely the lowest value proposition (as it would not be an ongoing fee).
- Sell "a license". It occurs to me that even though it is open, I could probably just charge them to use the software, with no support expressed or implied. This seems like a tough sell, though, and somehow... wrong.
I will be very grateful for any suggestions or advice!
* Well, I say "me", but actually my co-worker was the contact person who brought this opportunity to me. As such, he will be getting a cut of any of anything I make out of it.
Oh, another similar idea to the first listed above is to dual-license the software. Provide it gratis for personal use but require purchase of a license for commercial use (e.g., a per-seat or per-company license). Commercial users usually don't blink about paying for software (unless it's priced ridiculously) while this approach allows hobbyists and students easy access.
posted by axiom at 6:52 PM on December 18, 2015 [3 favorites]
posted by axiom at 6:52 PM on December 18, 2015 [3 favorites]
TL;DR: Sell your software like any other SAAS company would. Open source the code.
I spent a long while building a company that was selling open source software. Me and my cofounders spent a lot of time talking to potential clients about how our code was open. None of the clients cared. It actually turned out to be very confusing to talk about open source at all. We lost business deals because OSS is very confusing. We kept the product open, and pushed everything to GitHub when we made improvements. People were free to take the source and do what they wanted.
My other take is that the other routes you're proposing here are going to take a ton of work. I think it would be very hard to sell any of those things and stay sane with your current job. Even selling something "passively" is going to take a lot more of your time than you think. Even if the software is self-serve, people are going to have questions. Prepare to spend your evenings and weekends wrangling support tickets. That doesn't leave too much time for feature development.
Definitely MeMail me if you have any questions. This sounds like a really fun project!
posted by thebigdeadwaltz at 7:16 PM on December 18, 2015 [2 favorites]
I spent a long while building a company that was selling open source software. Me and my cofounders spent a lot of time talking to potential clients about how our code was open. None of the clients cared. It actually turned out to be very confusing to talk about open source at all. We lost business deals because OSS is very confusing. We kept the product open, and pushed everything to GitHub when we made improvements. People were free to take the source and do what they wanted.
My other take is that the other routes you're proposing here are going to take a ton of work. I think it would be very hard to sell any of those things and stay sane with your current job. Even selling something "passively" is going to take a lot more of your time than you think. Even if the software is self-serve, people are going to have questions. Prepare to spend your evenings and weekends wrangling support tickets. That doesn't leave too much time for feature development.
Definitely MeMail me if you have any questions. This sounds like a really fun project!
posted by thebigdeadwaltz at 7:16 PM on December 18, 2015 [2 favorites]
conflict of interest is not an issue here
check your employment terms. your current company may own the IP for the app - even your 'ideas' experienced while in their employ, but never implemented.
posted by j_curiouser at 7:38 PM on December 18, 2015 [4 favorites]
check your employment terms. your current company may own the IP for the app - even your 'ideas' experienced while in their employ, but never implemented.
posted by j_curiouser at 7:38 PM on December 18, 2015 [4 favorites]
Other than the collective good that comes from open source, are you expecting a community to form around this, and/or ready to accept submissions for improvement? Will you be able to put it up on github or other source control?
posted by nickggully at 8:49 PM on December 18, 2015
posted by nickggully at 8:49 PM on December 18, 2015
Not a direct answer, but the 30x500 course/site by Amy Hoy and Alex Hillman looks really good. I haven't done it myself, but they are two of the smartest people around in this "boot-strapping your own business" space.
posted by maupuia at 8:49 PM on December 18, 2015 [1 favorite]
posted by maupuia at 8:49 PM on December 18, 2015 [1 favorite]
I plan to write a new, from-scratch version of the application on my own time, so conflict of interest is not an issue here.
You are going to need to retain the services of an IP lawyer to see if there is even a legal way to do this in your state.
Your current job owns the product. You would need to follow specific rules (as laid out by your attorney) in order to re-create the product without using any of the IP owned by your current employer.
posted by sideshow at 10:57 PM on December 18, 2015 [4 favorites]
You are going to need to retain the services of an IP lawyer to see if there is even a legal way to do this in your state.
Your current job owns the product. You would need to follow specific rules (as laid out by your attorney) in order to re-create the product without using any of the IP owned by your current employer.
posted by sideshow at 10:57 PM on December 18, 2015 [4 favorites]
As you "get your feet wet," I recommend that for your first few customers, whatever agreement you make with them for support, training, hosting, etc., make the scope very clear and limit it to a few months. In other words, leave room for changing what your services entail and what they cost. You may discover people need far more or far less hand-holding than you expect, or you may discover other needs as they start using your software. Don't lock in to a year-long contract for anything - you might think they need 4 hours per week of support and it turns out they need 12. You don't want to commit to such an unknown.
posted by 4midori at 7:13 AM on December 19, 2015
posted by 4midori at 7:13 AM on December 19, 2015
Maybe, sell hosting and then find someone to handle problems that come up during your work hours.
Alternatively, if the users of this software are all nonprofits that are not competing with one-another, you might instead try to get several of them to buy into supporting the creation of the software as both a public good and one that meets their own needs. They'd get recognition for that, and would have your ear for feedback about the software.
(My work on free software often tends to be funded by that kind of thing, although I'd not call it "passive income".)
posted by joeyh at 10:01 AM on December 20, 2015
Alternatively, if the users of this software are all nonprofits that are not competing with one-another, you might instead try to get several of them to buy into supporting the creation of the software as both a public good and one that meets their own needs. They'd get recognition for that, and would have your ear for feedback about the software.
(My work on free software often tends to be funded by that kind of thing, although I'd not call it "passive income".)
posted by joeyh at 10:01 AM on December 20, 2015
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Another is to make the program free (and provide it with baseline documentation) but then have a book about how to use it for-pay (i.e. extended documentation). Obviously this requires two things: (1) a complicated-enough piece of software to need a book and (2) you write a book. You can epublish the book. This may be a dicey proposition for a small-scope program, because LOTS of people will be able to live without the book, never mind the ease with which ebooks are pirated.
posted by axiom at 6:48 PM on December 18, 2015