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Getting paid for software

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getting paidWhen we first started Moraware, the biggest mystery for me was how to convince people to give you money for your software. At the time, I assumed getting companies to part with cash was similar to getting me personally to part with cash (hint: it involves my cold dead hand.)

My thinking was distorted by the experience at my previous company which was backed by venture capital. In that world, we focused our effort on designing and building a product to get VC’s to give us millions of dollars. Once we secured an obscene amount of money from the VC’s, we hired a bunch of salespeople, and tried to sell it to customers. But they didn’t buy! Even though our VC’s (and our management consultant investors, our news reporting investors, and our oil company investors) all thought this was a great product, we couldn’t get Fortune 500 companies to part with a few hundred thousand dollars to purchase our awesome software.

With Moraware we took a completely different approach. The first version of JobTracker was built to solve a problem for a single customer. At the time I didn’t know if there ever would be a second customer.

After they were successfully using it, I looked in the yellow pages for another company that looked like they did the same thing as the first one, and picked the one that was the shortest drive away. I walked in the office and said “I’m building this product that solves this problem for another company like yours. Do you have the same problem?” They said yes, and a short while later they gave us a check and were our second customer.

A few months later we went to our first trade show. It was a pretty small show, but we talked to a few more companies that were also very similar. The next week we got an order over the phone from someone we didn’t know. Turns out they were at the show, and either didn’t tell us their name, or maybe just looked at the demo over someone’s shoulder. This was customer #3 and marked the turning point when we started getting sales on a regular basis.

What I didn’t understand at the beginning was that companies are in the business of spending money to make more money. We ourselves spend tons of money on employees, products, consultants, and services that all help us better support our customers and improve our productivity. But companies don’t spend time looking for what’s available to purchase, sorted by ROI. They are looking to solve specific problems they are facing today, and when they find such a solution, ROI is simply a determining factor on whether it makes sense to purchase or not.

Although it took me more than a year to figure it out, I soon learned the real challenge is not how to get people to buy software, but how to do it at a profit.

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Written by Ted Pitts

March 12, 2009 at 7:15 am

Posted in Uncategorized

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