Making money with a product: a myth?

I think this might actually be harder for programmers, at least with respect to software. Because I know how to write (almost) everything myself, it seems funny to pay for it, even in cases where logically I know it would save me far more time than it costs me in money.<p>I paid for a commercial graphics program this week, and it was really hard for me to do, even though I know it will save me time. All I see are the (relatively few) bugs, and all I can think about are how I would have done it better.<p>This could also be why "dev tools" are such a tarpit: at a certain stage, everybody realizes "I can write an XYZ!" (where XYZ = bug tracker, blog publisher, text editor, ...). The flip side is that if your target audience is programmers themselves, they'll be less likely to pay you because they know how to do all this, too.<p>The people I've seen with the most success are those who sell to the people furthest from those who can do it themselves. If I were starting a restaurant I wouldn't try to market it primarily to chefs.

Great post, I've blogged a bit about my personal realization with this as well. I didn't believe people would pay for things at my first startup two years ago. I thought we had to convince big companies that had huge budgets to pay for our product, not regular people.<p>Then, I went to work at a startup that actually made good money on a "virtual" product for regular people. I was just blown away that people would pay for something like that, and I learned in aggregate how much value a small purchase or monthly subscriber could have, even if the segment of users that paid was small.<p>With my new startup I knew if we put a price on it and charged, enough people would pay to keep us alive. Here we are just a few months in, able to pay ourselves and go full time on it. It's so empowering. I will be hesitant to do "free" or even "cheap" ever again after this.

The first product sale is euphoric and a bit magical. "Holy cow, somebody actually paid me for something I built!"<p>I just had my first sale of my software this past weekend, and it was fantastic: <a href="http://www.keacher.com/1060/how-i-got-to-my-first-sale/" rel="nofollow">http://www.keacher.com/1060/how-i-got-to-my-first-sale/</a>

Interesting post, Joel, but I have to say this isn't a problem I struggle with. For example:<p>'$10 seems like a lot of money. It can feel unimaginable people will hand over $10'<p>Really? If something will save me even a few minutes on an ongoing basis - or provide a bit more value - $10 is a pretty small price to pay. For example:<p>- $7 / month for Github - $29 / month for Kiss Insights survey tool - $50 / year for Crashplan<p>...and these are just a few. I'm a bit more on the business / marketing side of things than development, so I likely have a different mindset. But I'll happily pay for great products that make me more efficient or save me time....

Making money with a product is easy. Staying cash flow positive is not. Selling $10 for $5 works great as long as you have money to burn. But then reality sets in and as you point out "profit" becomes the keyword. My best guess is that people pay to solve annoying problems faster.

In my opinion you have to overcome at least one of two obstacles to make money with a product:<p>- Either know an interesting domain / niche-market which is not known by thousands of other developers (This is suprisingly hard for me)<p>- Or you have to work your ass off / be very smart to create something which is significatnly better then the free alternatives. Because, most of the time, there are free alternatives, and most of the time they are good enough. Sometimes they are not just good enough, but they even have enthusiastic fans.<p>(The third alternative is to create something so innovative that has no competitors, but there is a huge risk that the idea is just not good enough, there is not enough user need for it)<p>I am working on a markdown editor for windows (in fact multiplatform, developed in Qt), which no doubt will be the best in its category. The question is not that whether will it be the best or not, the question is this: Is the free alternative good enough? The answer is not trivial.

A lot of the religious arguments over Apple amount to "it just works so I'm willing to pay more" vs "you just ____ and you'll pay less". The author discovers what Apple knows: make it simple, make it work, and make it save customers time and they'll fall over themselves handing you money.

Just getting over the myth myself. We launched a little project a few weeks ago, servicing a very niche market that seems to like spending money on the service.<p>I was amazed when my partner pitched it to me, but after a little research we launched with about 40 hours of coding. First "big" day of stripe transfers hitting my account tomorrow and I'm damn near giddy. Probably not ever going to be anything more than a few hundred bucks a month, but its a nice little ATM and seems like its going to be on autopilot with the next code update with maintenance needs of just an hour or two a week.

Setting price based on time savings limits the perceived value of your product since for most people they set the opportunity cost of their time pretty low. It might work better in a b2b sale where the opportunity cost is higher.<p>What you really want to do is provide value by letting customers do something that is otherwise impossible or painful.<p>For instance buffer lets you sleep while you tweet. That is much more valuable than saving time.<p>There is a guy on twitter (@pricing) that talks about pricing, go read a few hundred of his tweets and see it helps you get your mind wrapped around pricing better.

I had to leave the software development world for a few years to see clearly why people were willing to pay for software as a service for seemingly simple things like keeping track of their contacts (think 37 Signals' Highrise) since I always had the "well, I can build that myself" mentality.<p>I found myself on a team of (non-IT) consultants all billing $150+/hr and suddenly that $20/50/100/whatever per month SaaS charge is absolutely meaningless. It's really <i>nothing</i> to the company. It just doesn't even register as a "real" expense.

You can turn up a quick buck sure. I've done that: shareware and websites. But how about long term product development? Not so easy. Maybe it's better to secure your place on the consulting market where the money are real because of all crazy stuff going on inside the big corps. I still don't know.

The main problem, I think, is how to ask for money and knowing how much.

&#62;<i>He started to think about how he would achieve this, and realised that to make it the only thing he worked on, he’d need to make money from the product. He then thought about other products people pay for. He thought about products he pay’s for, and realised he doesn’t pay for products, or at least it was very rare for him to. He thought long and hard and tried to understand why anyone would pay for anything.</i><p>WTF does this even mean?<p>They had the discussion in a coffee shop. Have they paid for their coffee? Their cake? While doing so, have they checked their mails in the phones they had paid for, that come with contracts they pay for?<p>Were they wearing clothes that they had paid for? Did they carry paid-for backpacks with paid-for laptops inside, each with several paid-for apps, from Keynote to Microsoft Windows? Was the coffee shop furnished with paid-for furniture and decorations?