Saturday, February 23, 2013

Want to compete with big software companies? Copy their best features!

If you run a small software company, you know how difficult it can be to make money. Contract software pays well, but you always have to be on the hunt for new contracts. The right product sells well but it takes an enormous amount of effort and time just to come up with a good idea, not to mention the time it takes to actually develop the product.  Because of this dilemma, a lot of small firms spend their entire existence scratching at the bottom of the industry looking for the tiny crumbs of customers that might keep them in business for another year.

Let me be very clear here: doing business this way makes no sense for a small firm and will eventually lead to non-growth or bankruptcy.  It simply isn't sustainable unless you have a true visionary at the helm and, let's face it, there really aren't a lot of Steve Jobs' out there anymore.

So what's a budding powerhouse company to do if they want to compete with the big boys and pull in the big bucks? Simple: imitate, copy, scale down.

When businesses buy software from a large vendor like Microsoft, they rarely use all of the features in the solution. Think about that for a moment: does anyone in your company use all of the features of Microsoft Office? Even collectively, I'd wager the answer is no. But even though many features will never be used (most users don't even know about many of them) businesses still pay for them when they buy the package.

When you consider the above paragraph, the solution to competing effectively becomes obvious: create a compatible product but offer fewer features; only the features that, say, 75% of users actually use and sell it for much less. The remaining 25% who use those other features? Ignore them. They can go to the larger, more expensive package.

By following this method, you can build a sustainable, growing, and forward profitable company. One where you can have the freedom to experiment with ideas and technologies that you think might be a hit in the market but couldn't otherwise afford to take the risks to create.

Lastly, in some countries, there could be issues with following this method so definitely consult with an attorney about patents before you do an exact clone of a product. In most cases, you should be alright but it's better safe than sorry.

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