General Consultant Discussion

For $50,000 a year Terry will tell you to develop your own source of recurring revenue and forget about the software publisher for a steady commission.

The real problem that I'm not sure we've cracked, is how to you shift people to that model while a high percentage of competitors refuse to see the cheese has moved. If you tell customers 'you must pay $1,000/month to be our customer but you get x,y&z' and 90% of the others are happy to bill in 15 minute increments, how do you avoid significant loss. When companies like SOTA moved from 'pay per upgrade' models to fixed annual maintenance (which was a goldmine for them) they could pull it off because companies were somewhat 'locked in' to them due to the pain of changing systems. It's not too painful changing vars... Thoughts?

I think firms have to continually de-emphasize the hourly ""we don't see value in a plan"" customers and put all their efforts into attracting customers who will go onto your own plan. This happens in several ways. a. Don't accept any new customers who won't go on plan b. Continue to roll out service offerings only available for plan customers (or at a much higher price for your legacy non-plan) - this could include discounted upgrade fees (or rather the fee for non-plan is higher). You'll probably never get to 100% on this but the way I started was with option (a). There is no ""pay as you go"" hourly option for new customers. If that's what they want then they find someone else.

Mark, the annual plans can't happen in a vacuum -- your other service offerings have to be fixed-price too. One customer profile will warm to annual plans after they've experienced the benefits of the fixed-price/defined deliverable projects. My experience with this model has confirmed at least 4 things: - There is MUCH more selling effort involved in fixed-price work and plans. But most of that effort is in the area of getting the customer to understand the value of your offering. That in itself has some staying power. - the fixed-price work really must come with 3 options. A single option just feels like ""take it or leave it"" to the customer. The option approach leaves them feeling empowered to make the most of the situation. - There will always (or at least for a long time there will) be a large chunk of customers who will choose what looks like the lowest cash price to them. They will always be suckered by the hourly-rate option. So a large chunk of potential customers will not be interested in your approach. Kless would tell you that they probably never would make you any money. - The combination of the first three means this approach is really, really hard to execute. Hence, I am pretty sure that the 80/20 rule will apply: only ~20% of partners will adopt it. So, there is lots of competitive opportunity there.