Selling product vs selling services:

[Peter Gibbons]

I always thought selling services is more difficult than selling a product.
Based on this old post it looks like a few forum users agree.

So why do we have here a bias against micro ISV's?
Just to offset the bias on BoS for mISV?

Is there a perception that most mISVs never make any real money?

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Jim:

Personally, I could never make it happen for consulting services.
...
Selling consulting is a tough, competitive game, and my hats off to anybody who has made it work.

ldrews:

What do you think the difference is for you between consulting sales and product sales?  Why does one work for you but the other doesn't?

Richardk:

I'll jump at that. For me, a product is something tangible while consulting sales is so nebulous unless you sell a well defined service.

ldrews:

I agree, selling a generic service is difficult.  So I ususally try not to do that.  I have identified a small number of specific services that I can propose based on what I can learn about the client quickly.

http://www.computerconsultantsforum.com/forum/links-and-resources-library/what-to-say-after-hello/

[The Gorn]

I always thought selling services is more difficult than selling a product.
Based on this old post it looks like a few forum users agree.

Selling services (high/indefinite spend, indefinite payback, uncertain outcome) is surely more difficult than selling some products (constrained and known spend, quantifiable payback, certain outcome).

The key problem with mISVs is that you don't know whether your effort will pay off. You don't know if what you dedicate your resources to has economic value. You sink a ton of time into a product and then it's a fixed quantity. It will either sell or it won't. If it doesn't, it has little or no economic value.

As a consultant you can adapt what you sell to every customer. And if you were smart you didn't dedicate 2 years of your life (or whatever) to one key sale.

If the customer is even listening to your consultant's pitch it's probably because they know that a standard product won't help them with their problem.

I think the main problem with most "consultants" is that they really want to be employee type temps with a bunch of assurances of this and that. So they want to treat consulting like a job and it's really not. And a hallmark of employee type thinking is not being patient and not developing your skill set to match what the world needs.

Yeah, consulting is a hassle. But dedicating resources like a year or two to something that is a crap shoot is even worse. It's time spent on the bench that nobody even respects as experience (because it wasn't paid experience.)

So why do we have here a bias against micro ISV's?
Just to offset the bias on BoS for mISV?

I just don't like the ego level on BoS and JoS and the cloud of smug. It infuriates me. Also I never cared for the cargo cult mentality of some blogger telling a bunch of geeks what they want to hear and having it lapped up whole.

Is there a perception that most mISVs never make any real money?

I bet a majority of mISVs (defined as any one to three person sweat equity funded software product startup) never sell more than 5 copies of their product. A few obviously break through and they're the ones you hear about.

[Peter Gibbons]

The key problem with mISVs is that you don't know whether your effort will pay off. You don't know if what you dedicate your resources to has economic value. You sink a ton of time into a product and then it's a fixed quantity. It will either sell or it won't. If it doesn't, it has little or no economic value.

There are obviously different kind of software products out there but a lot of them are really trivial to develop.

Case in point - Patrick's Bingo Card Creator. He himself acknowledges that the people that call his program "Hello World with Printing" are indeed correct. I think I could create a better than the original replica in a week.
Where Patrick is spending 99% of his time is marketing and self promotion. This is his strength.

I created the first version of my own product for a client in one week. If I knew what I know now I would have spent just another 3 weeks of my spare time to add a few important features, clean up the code and start selling it.

Instead I came up with this grandiose version of product for Java/C# and C++. ( Luckily later I decided to drop the C++ version and concentrate on the first two. ) I spent between 3.5 and 4 months working on this ( and another project ) full time between contracts.

So I think that with today's highly productive environments and libraries - one can develop an application or SaaS web site in a month or two easily. ( If only the key features are added. )

Even if the original idea was not great - the code could be easily converted to do something different that will sell.

[The Original Henry]

Business is all about sales, and selling expensive long-term consulting services is a long cycle that takes a lot of effort to complete. It's the epitome of the high price, low volume model and scaling that model is nearly impossible to do effectively.

I don't know if there is a bias against the idea of an mISV so much as there is a bias against the countless termites that come out of the woodwork wearing the mISV badge. Most of these people are descendants of the get-rich-quick-without-doing-a-damned-thing crowd, and their constant bleating about things they actually have no real understanding of becomes very tiresome.

[The Original Henry]

So I think that with today's highly productive environments and libraries - one can develop an application or SaaS web site in a month or two easily. ( If only the key features are added. )

That's a very common misconception that gets a lot of people into trouble. That statement may be largely true about core functions, but core functions by themselves are not usable - much less sale-able. It's the never-ending sphere of details that are applied around those core functions that make or break a software product, and those details take 90% of the time, effort, and money when creating a usable piece of software. They are the most overlooked and underestimated part of any software project. It's why morons on rentacoder think it only takes a few days to make an eBay clone - after all, how hard could it be to create the core functions of a simple auction site?

[The Gorn]

@Original Henry: wonderful insights as usual.

Business is all about sales, and selling expensive long-term consulting services is a long cycle that takes a lot of effort to complete. It's the epitome of the high price, low volume model and scaling that model is nearly impossible to do effectively.

I agree with you. But every business format has a challenge or a downside or else everyone would be trying to do it.

The fundamental, deep down #1 reason that I have never tried an mISV myself is because I simply have never developed an idea that I believe in deeply enough to dedicate speculative time to developing it into a product.

A closely running secondary (#2) reason that I've never tried is that I have the deep set feeling that anything that I could justify spending such time on would be chicken-shit and uncompetitive in the real world. In other words, anything within the grasp of a one man part time mISV is inherently not substantial enough to risk anything on.

The #1 reason (no good idea) is a show stopper. The #2 reason (little faith in the business format) is based mainly upon knowing quite a few people in my own circle who have tried something like that on a one man scale and they failed to sell much of anything.

Having said all that, I also know plenty of programmers and network types who crashed and burned as consultants. Every failure in that space generally does more than one thing abysmally bad, even if they do manage to bring new business in. Typical failure points are the immature dummies who may produce a great income but who don't save funds to pay their business taxes, as well as the ones who hide behind a keyboard and wonder why they don't get any business.

So to lay it out like that, one could say something about any business format that disqualifies it from consideration.

The real truth is that you have to dedicate yourself to learning a business format, in order to become good enough at it that it can make you a living. And that is certainly possible.

I have many misgivings about the consulting track. I have even more misgivings about mISV. For me. For someone else it may be quite different because they have values, experiences and background that makes mISV more doable than it is for me.

For example, I suspect that someone from a retail background could zero in more effectively on an mISV niche than I ever could. So I admit that my brain is "in the way."

I don't know if there is a bias against the idea of an mISV so much as there is a bias against the countless termites that come out of the woodwork wearing the mISV badge. Most of these people are descendants of the get-rich-quick-without-doing-a-damned-thing crowd, and their constant bleating about things they actually have no real understanding of becomes very tiresome.

So well said. There's a lot of the old "MLM" (multi-level marketing) "can't lose" mentality on those forums. You become an outcast in that kind of culture by asking whether assertions are realistic.

That's a very common misconception that gets a lot of people into trouble. That statement may be largely true about core functions, but core functions by themselves are not usable - much less sale-able. It's the never-ending sphere of details that are applied around those core functions that make or break a software product, and those details take 90% of the time, effort, and money when creating a usable piece of software. They are the most overlooked and underestimated part of any software project. It's why morons on rentacoder think it only takes a few days to make an eBay clone - after all, how hard could it be to create the core functions of a simple auction site?

++++Henry.

Product development (I'm doing it right now as my primary gig) feels like one huge pile of multiple iteration cycles.  So WELL put - my client has invested six figures in a multimedia library for our product and it was only the *start*, a starting point and that is *it*.

[Peter Gibbons]

Business is all about sales, and selling expensive long-term consulting services is a long cycle that takes a lot of effort to complete. It's the epitome of the high price, low volume model and scaling that model is nearly impossible to do effectively.

I will have to disagree.  While sales are one critical part the other one is the product.

Don't forget that even the slick salespeople from Oracle, IBM, SAP or Microsoft have a product(s) behind them.
So an independent consultant is at huge disadvantage compared to one of those. Not only he/she is not going to be as good at sales as professional sales person from one of the companies mentioned - he/she will not have a product that is the key element of the whole system.

While having some unique customizable 'consultingware' would be great - another option is to have expert level knowledge about some open source packages. Or become a vendor for one of the packages made by the big companies I mentioned and go after the smaller deals that they don't go after themselves.

Product development (I'm doing it right now as my primary gig) feels like one huge pile of multiple iteration cycles.  So WELL put - my client has invested six figures in a multimedia library for our product and it was only the *start*, a starting point and that is *it*.

GB - I find the type of projects you are working on very unique and your modus operandi uncopyable. When I am talking about products I never think about complex systems like the one you are describing.


I certainly don't think the microISV route is the right one for everybody. I am just trying to decide if attempting to sell consulting services directly would work for me. Over the years on this forum I have read posts from very few people that have been able to do this consistently. I know a few consultants that were very successful during the boom years - not so much lately ...

[The Original Henry]

The #1 reason (no good idea) is a show stopper.  ......   So I admit that my brain is "in the way."

While sales are one critical part the other one is the product.

I put these quotes together because they represent a very similar idea. In a holistic sense the product, or the idea for a product, is equally as important as the ability to sell it. In the real world as it sits I've witnessed on countless occasions that this simply doesn't play out. I've seen companies make millions by selling vaporware. I've seen governments throw away tens of millions on nothing but lofty promises. I've seen even more companies make barrels of cash selling software that was mind-boggling bad. I've seen people pay money for pet rocks. I've seen eBay auctions net thousands to buy the ghost in someone's house. I've read about people making thousands for an iPhone app that does nothing but produce a noise that sounds like a fart, or that just shows an image of a red ruby.

If you consider that the entire goal of a capitalistic system is to make money, the means by which that happens becomes almost meaningless. All you have to do is find something that you can convince other people to willingly give you money for and you have a viable "product". Whatever that "thing" happens to be is entirely irrelevant - it doesn't have to be good, it doesn't have to be functional, and it doesn't even have to exist. The only thing that matters is that people are willing to give you money for it.

[The Gorn]

I've seen companies make millions by selling vaporware. I've seen governments throw away tens of millions on nothing but lofty promises. I've seen even more companies make barrels of cash selling software that was mind-boggling bad. I've seen people pay money for pet rocks. I've seen eBay auctions net thousands to buy the ghost in someone's house. I've read about people making thousands for an iPhone app that does nothing but produce a noise that sounds like a fart, or that just shows an image of a red ruby.

If you consider that the entire goal of a capitalistic system is to make money, the means by which that happens becomes almost meaningless. All you have to do is find something that you can convince other people to willingly give you money for and you have a viable "product". Whatever that "thing" happens to be is entirely irrelevant - it doesn't have to be good, it doesn't have to be functional, and it doesn't even have to exist. The only thing that matters is that people are willing to give you money for it.

In other words - the product or service really and truly doesn't matter. Only whether you can sell something.

I get that. I got that a while back. I try to reconcile that concept with my craftsman's mindset. It's virtually impossible.

I am able to sell my time in my weird and indescribable little niche that it seems that very senior technology people have an exceptionally difficult time grasping.

I would feel much better decoupling my ability to bring in revenue from my dependence upon mastery of a particular library, niche, tool, OS, or language. So what you are saying is extremely liberating to someone who can act on that knowledge. It opens up your scope.

But what you're saying is completely discouraging to someone (like Peter) who sees his work as craft and as supremely important in itself.

I really want to think as Peter does.  I see it as more moral to provide real value and quality than to not do so.

But seeing too many good products, ideas and people shot down over the years has made me think as you do. If I am to survive, then the moral higher good - providing great value and quality - almost becomes a liability if it slows down or impedes my ability to compete to earn my own income.

[The Original Henry]

Nothing against true craftsmen, but the market has largely relegated them to renaissance festivals. The ones that are left mostly do it for the love of their craft because they can't make much money at it anymore. I can't say I like that, but it's just the way to world is structured at the moment.

I see it as more moral to provide real value and quality than to not do so.

Value and quality are subjective concepts. What you're really saying is you don't feel right doing or selling something that you don't find to be valuable or of high quality. That's why so many of these mISV groupies fail, because they create and sell stuff that's valuable to them but ends up being worthless to consumers.

Objectively value and quality are determined by what people are willing to give you money for. If people found value in shit sandwiches I would have no problem hiring a warehouse full of people to sit on toilets all day. I think that would be a crappy product (haha) but if other people are willing to give me money to produce it for them then that's all that matters.

I think that's why the mindset of "service to others" is so popular in the business culture. Rather than doing what's valuable to you and then trying to convince others that it should be valuable to them too you're already in the frame of mind to identify what's valuable to other people and then doing it for them. One could argue that there is more morality in that than there is in the converse.

[The Gorn]

Nothing against true craftsmen, but the market has largely relegated them to renaissance festivals. The ones that are left mostly do it for the love of their craft because they can't make much money at it anymore. I can't say I like that, but it's just the way to world is structured at the moment.

I see exactly what you are saying. I need to be more specific about my assertions.

I do not necessarily believe that I know better than my customers do about their real needs.

Selling into a perception means that you're considering the customer the best judge of their needs. That may or may not be the case.

I do believe that I have a fiduciary responsibility to provide them with the best possible good or service that helps them the most within the scope of their desired purchase. Selling the customer a hollow shell, even if they say that it's OK, but not really understanding that it is a hollow shell, simply seems ethically wrong.

Pandering to a client's temporary infatuation with something that really doesn't help them, which they have fallen in love with, just seems wrong on a fundamental ethical level.

HOWEVER.... drum roll....

I have had contracts terminated, I have inculcated the client's distrust of my methods, intentions and knowledge, and I have poisoned client relationships, by resisting something really, transcendantly stupid that the client insists upon, that is actually damaging to them.

I have tended to see my client relationships as a doctor would. A doctor knows that a stupid patient insisting upon doing the wrong thing will go blind, die, or have high blood sugar sufficient to make rock candy with by dipping strings in their own blood.  But patients typically do not fire their doctors. They accept their counsel.

Clients in technology will absolutely not consider even an expert IT consultant to know better/more/have more situational wisdom. You're hired to kiss their ass, in effect.

There is no real solution to this. You do the "wrong" thing  that is actually wrong, and you make a living, or you essentially refuse by bucking the client, and you starve/go dry.

Where I am going with this is that one essentially has to become morally somewhat blind in order to make a living in some circumstances that appear to be straightforward business transactions. So I agree with you even as I really do not want to agree with you. You are "most right" in this thread, IMO.

I will say one more thing about this. In order for society to function effectively, SOMEONE has to produce value, irrespective of the blindness and stupidity of the writers-of-the-big-checks. That is what craftsmen - engineers, developers, chemists, scientists, etc do. Our civilization is based upon their work.

But today they'd better know their places... as you effectively said.

[The Original Henry]

Selling into a perception means that you're considering the customer the best judge of their needs. That may or may not be the case.

Ultimately it's not your place to question the customer's judgment. Most of the time a consumer decision will be based on circumstances that you aren't fully aware of. What may seem like a bad deal in the limited scope of a single transaction may in fact be beneficial in a larger scope that only the consumer sees. This makes you morally blind from the start so it precludes you from judging someone else's reasons or motives as to what they find value in.

If you're in a consulting situation where your expertise is being relied upon then you can make an argument that you have the responsibility to make the decision-maker aware of the issues, but once the client overrules you then you have been absolved of any morality issues in proceeding as the client requests. They most certainly will have a broader view of the situation and may have legitimate reasons for making a wacky decision that you aren't fully aware of.

This is all assuming that the transactions in question don't fall under universal immorality like breaking the law or selling body parts or something, but that's a completely different scope of discussion.

[The Gorn]

Ultimately it's not your place to question the customer's judgment. Most of the time a consumer decision will be based on circumstances that you aren't fully aware of. What may seem like a bad deal in the limited scope of a single transaction may in fact be beneficial in a larger scope that only the consumer sees.
...
This makes you morally blind from the start so it precludes you from judging someone else's reasons or motives as to what they find value in.

If you're in a consulting situation where your expertise is being relied upon then you can make an argument that you have the responsibility to make the decision-maker aware of the issues, but once the client overrules you then you have been absolved of any morality issues in proceeding as the client requests.

I disagree with the weight that you give the client's judgement. Again, I use the analogy of the doctor keeping the patient healthy. I find that clients generally don't "know" (grok, really understand) on deeper levels. You're saying that the client's reasoning is deeper than mine probably is. I have not found that to be the case too often. They really are cheaping out, they really are taking shortcuts, and they really are embracing mediocrity out of pure defensiveness.

I want to make and sell great stuff and I want to intervene. You are saying that the client knows better and may not be able to use my great stuff and he wants to do it himself, badly, rather than use outside help.

Ok, now I will drop it. 

I agree completely with where this discussion ultimately leads, despite our differing view of the right or wrong.

Whether the client is right or wrong, they are the customer, and if they aren't buying then I'm not earning. And customers buy what they think they want... not what they truly need. In my experience.

The one thing I have never been able to do convincingly is to accept the client's judgement when I believe that I understand better. I would not make a good salesman.

A while back I read and commented on The Secrets of Consulting by Jerry Weinberg. He says pretty much what you are saying. That "doctor" role that I generally desire to assume is only at the client's request and the client pretty much has to believe that it's entirely his idea, even when much of it is not.

[lorb]

The doctor analogy makes the most sense.

Why would we have an axe to grind, as consultants?  They say we don't know their business domain, that only just about _proves_ that when we recommend something, it most likely has merit at least in terms of it not mattering what their business is.

For example, if we make an sql query, and unless we are the ones taking the shortcut or having a moment of incompetence, which is possible from time to time but is another subject, but even _then_ it has nothing to do with "getting up in their business" so to speak, it's an impartial look from someone who is likely to be looking at the data from an almost mathematical viewpoint.

If they are crazy and want to go f themselves (in effect, no longer wanting our business), then there is little we can or should bother to do to stop that (unless we really want to try for some reason).

What may seem like a bad deal in the limited scope of a single transaction may in fact be beneficial in a larger scope that only the consumer sees.

I disagree with this because they are the manager of the project, and the "view" that they provide you with should be an internally consistent system.  The "You don't know everything" line is BS because if that's the case then they should have 'splained what you needed to know to perform your job function.  So that is more like unintentional client ignorance.

If they simply tell you what to do, technically, then that means they are at least your equal from a technical know how perspective and are simply trying to save time by having you do it.  Which incidentally, I wouldn't completely believe them if they said they could do it all themselves, anyway.  In theory anybody could do it, but that's not the point.

My take on when all the hand-waving starts "You don't know, this has to connect to a lot of other systems in place for years, decades", it's probably just a BS excuse to mask their incompetence unless they can tell you precisely why and have that make sense.  Are they IT professionals (who implied know what they are doing) for all those years?  They only way to hide ignorance is through paranoia and a mask of excuses.  Their area is presumably not ours and exposes their weakpoint, which could very well suck because they are being paid for their data (although we like to say they are paid for their people-skills - "selling", to us, but more likely their people-skills in that domain).

[The Gorn]

I'm not beating up on Henry or what he's saying.

I think he's the most correct one in this thread in terms of identifying what is really important in order to actually do business.

The fact remains that despite whatever you or I think that the client needs, the client may simply not care because they value fast, cheap, or keeping political friction down, more than the "best" approach.

Again - the "doctor" role is a very close model of a true consultant's (advice-giver's) role. BUT the client HAS TO EXPECT ADVICE FROM YOU AND REQUEST IT. IF THEY DO NOT ASK FOR YOUR ADVICE, YOU MUST NOT GIVE IT TO THEM. EVER.

Most clients I've had would EMPHATICALLY deny that they EVER needed my advice. Even when they did, and received it, and took credit for the idea themselves. They just wanted the widget that I could build for them. They did not want to be given counsel, warning, or advice.

I have given advice to clients that did not want it. In general they absolutely hated me for it. And then, after I was gone, they sometimes implemented that advice, successfully. And still blamed me for not playing ball, or not reusing the existing broken work that they expected me to build upon, or otherwise getting along as I "should" have with their key people who had cranio-rectal inversion.

Human beings despise truth that conflicts with their egos and they blame the messenger. Clients are human beings. A double whammy consists in that business people generally believe that paying someone else makes that person inferior morally and inferior in terms of actual wisdom to the payer.

Check it out: someone pays you, they usually think they're just better than you. Wiser, harder working. Never lucky.

"If you were rich like me and could write checks like me to pay morally weaker, inferior, less worthy people like you, then you would not be a stupid-smart-stupid nerd programmer working so hard for dollars that I tauntingly scatter on the ground in front of you."

 

Business consists of the Zen subordination of your ego and your principles to the immediate situation. Period.

Remember what Henry said about "craftsmen" being relegated to a Renaissance Faire.

He's right. One day it will be programmers.