Tuesday, April 22, 2014

Startup Notes: Software Sales and Product Quality

When I visited a potential customer (their minimum monthly business transaction is more than 10 Lakhs) to discuss about our software products and services, they showed interest to spend only 12K for the product worth 70K. I denied to sell our software solution to him. Few days later they succeeded to get one for 10K (from some other startup) for their business. Few months later the same business owner called me back and told me that the software he purchased for low cost, is with many defects and support from vendor is not up to the mark. He also expressed that “I started hating software startup companies. Are you a startup?” For next few days we had several exhaustive discussions with him and finally we managed to deploy our software solution in their office. Now, he is our happy customer.

When I checked, the software vendor who sold software for 10K is a 2 years old startup and he is struggling to get more customers bothering least about his software quality and support model. When I personally had chat with him, he told “It was hard to manage customer at that cost. He was expecting more features for very low additional cost”.

2 Things were in my mind. Software sale competition and product build quality.

I don't wanted to assume anything about the startup community just by looking at one guy and wanted to do the reality check. I posted a query in one of the popular Facebook groups "Bangalore Startups" where nearly 19K+ startup enthusiasts interact each other.

The query was simple, "How many of you are using Ticket (issue) tracking system to track your work or software defects? If so, which app (online or offline) you are using?"
I expected some good response from fellow members and I was wrong. Less than 10 people took interest to like and comment on this post. (later I made another follow-up post https://www.facebook.com/groups/blrstartups/permalink/736607643028043/ it attracted only 5 people!!)

This made me clear that many StartUps are starting but not really doing things in a proper or matured way!! Many are failing to gauge proper cost for their product but very busy in acquiring new customers (with unhealthy price offerings), pushing their (moderately tested) software to production and later, not just lose customer but also contribute to create wrong reputation about software startup community. If this is the attitude of startup companies then its a serious problem to all. StartUps should not run behind making quick money. Instead they must concentrate on building (if not innovative) stable products and have long-term trusted relationship with customers.

Now a day, I see not many business owners inclined towards investing more than few thousands for a software solution to manage their business. They already faced many startups before, seen them quoting unreasonably low price and came to the conclusion that software they need to manage their business should not cost more than few thousand rupees. It is those startups who are in hurry capturing new customers are responsible to set such a low pricing expectation.

All startups need some kind of understanding, its like, we know a double cheese pizza with prize tag Rs.500/- is actually prepared by spending less than Rs.150/- but still we can not protest or bargain, the reason?
- The quality of that pizza is soo good we don't want to have any other.
- Though other pizza shops prepare their own flavored double cheese pizza, you won't get it for Rs.150/-, It is still priced nearly Rs.400/- or Rs.450/- if not Rs.500/-. So for any customer who think of having double cheese pizza, never think of getting it less than Rs.400/-. It is those pizza owner's business strategy or you can call it as monopoly to maintain a minimum profitable cost and stabilize their market.

So next time, when you are having pizza in-between your busy programming schedule, think about it, should you offer an ERP suite that is worth "minimum" of Rs 50K for Rs.10K just to win one customer? Aren't we diluting our opportunities by offering under-estimated cost?

My request to the aspiring software startup community is please properly value your software product. Work hard to build a brand instead growing unmanaged customers list. Most important thing is do things systematically and avoid unhealthy competition. It is true that if you don't act fast, some one might grab your opportunity. Agreed! but your urgency to make business should not fluctuate core values.


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