It's probably not a secret - I love 37signals . Not only do they build great products, but they have a way of cutting through the clutter and bringing refreshing clarity to often complex issues. They never fail to inspire me and their recent blog post titled The Secret of Making Money Online was no exception. This is a video of a talk that David Heinemeier (of 37signals) gave at Statup School.
David tackled one of the more pressing dilemmas in modern software development...something like:
Build great application
What miracle happens at #2??? Good question. Some of David's more salient points:
Having a price helps create profit (it's almost too simple to work).
This notion has been lost in the web world.
There are many ways to have a price - not just one.
If people like your product, they pay you for it and if they continue to like it, they continue to pay.
This has been a successful business model for thousands of years.
Building the next Facebook and selling it for 3 billion dollars is an extremely remote possibility. The chance that you might build a decent niche product that a few thousand people like and will make you a decent living - much better odds.
So, David's talk got me to thinking about my original intent for CPO and it's future. My intent from the beginning was for CPO to become profitable somehow - the question was always the HOW. In my perfect world, CPO would always be a free product and earn revenue in other ways.
As you might have noticed, we have been trying some of these options out for the past month. Since early March, we've solicited paid contributions, paid ads and non-financial contributions like monitoring the forum, translating or writing documentation. So far this experiment has had limited...ok, NO success. Now, I'm not expecting miracles here but I genuinely believed that CPO had enough active and loyal users to spin this plan up a bit by now. I'm a little skeptical - looking around I find that others are in the same boat with contribution/ad supported business models. But it's ok - I've decided to give this plan a total of three months to prove itself one way or the other and then I'll move to Plan B.
So I'll level with you and try to be brief. CPO needs to begin earning its own living - pure and simple. I see 2 possible scenarios playing out over the next 6 months:
CPO begins generating enough revenue to justify better support, a more robust hosting infrastructure, regular bug fixes and more features. This doesn't have to be a lot of money at this stage - just enough to entice a little help and to keep motivation up enough to get things to the next level.
Or, CPO generates no revenue and things stay as they are indefinitely. I can always afford the hosting account but there will be limited support, few if any new features and bug fixes when I get around to it.
I'm not satisfied with scenario #2 mostly because I know it doesn't have to occur. I know that there are some problems with CPO - I know that support has been virtually non-existent for the past several months. I also know that I'm still passionate about turning CPO into a truly great product - but not for free. The key word here is sustainable - we don't need a $5,000,000 infusion of cash but we do need something that will generate revenue next month, and the month after that and on and so on and so forth. Otherwise, everything will stop.
So, how can we remedy this? I'm coming to you, the CPO user community, before making any firm decisions because I feel it's fair that you have a say in how this all goes down. I'll throw out the first pitch...here are some ideas I have for generating revenue:
Created a tiered hosted account model. A free version with no support, no file uploads and limits on projects, clients and invoices. A paid ($5-$10 per month) premium account that would include responsive support, file uploads and unlimited number of clients, projects, etc.
Offer the source code for download and installation on any server for $149. This would include 3 months of support and free upgrades forever.
Offer a combination of 1 and 2.
Charge only for the source code and keep the hosted accounts free.
That's about all I can think of at the moment but I'm open to suggestions. I just got done reading some blog posts over at ActiveCollab and it looks like the community really hit them hard for springing a pay only revenue model on a previously free product without any warning. I'm trying to avoid making their mistake so let's all be constructive and try to find a win-win. I trust my users.
One request though...let's stay away from comments like 'Yeah but Joomla/WordPress/Drupal/eGroupWare [insert favorite open source poster child here] give their stuff away for free and still make money.' unless you can provide explicit ways in which they bring in revenue. Otherwise it's just not very helpful. I know there are a number of quality open source initiatives that make money in ways other than selling software - but I think in the grand scheme of things, they tend to be the exception and not the rule. There are, however, numerous examples of shitty OSS that is completely free and worth every penny...I don't want CPO to fall into that camp if I can avoid it.
Thanks for reading and for your thoughts.