Cost Analysis, Carry-on Or Not?
Hi forum,
I have this business idea, where I would build a backend and UI layer on top of one of Google API services, tailor for a specific an enterprise market.
I did an analysis of how much would cost using this Google API, and realized, bottomline, it would cost about 20 USD daily per employee, this is without any profit margin for my business. To put in perspective a comany with 100 employees in operations would goes them about 40,000 USD per month.
This number is way beyond what I was planning to charge, and it seems very unlikely in this particular market, would be able to aford such a service.
My alternatives on this are:
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Build my own service from scratch instead of using Google's to own this part of the proccess and have control of the costs, but it is way beyond my domain of expertise (Machine Learning) and I don't have either the money or time to do it. I would have to bring a few people in.
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Investigate if within this market, are companies on the higher end of the spectrum where their income scales with their FTE in operations.
-
Box the idea, move to something else and perhaps revisit when I have the resources for step 1.
Are there any other obvious alternatives I may not have thought of?
I wouldn't hurry to try to rebuild a big tool...
If you can't find a niche of customer that this service would be worth 3x that, find something else IMHO (worth won't translate automatically to pricing and customer acquisition, I'd want a big gap for a reason, specially when talking about the premium end where sales cycles are long and expensive, can put any other number but probably not 10%)
Without digging much into details and knowing what API it is and from a business perspective I can assume that either:
1- Your calculations and estimates of profit are wrong (no offense)
2- You are not using the full potential of the API and still paying for the service
3- Assuming you are using the full potential of the API, the return to the user should be way more than the cost and you should be able to justify the high price tag!
4- If google can't justify the high price of the API and couple it with high return for the user, no one would use it and google will stop maintaining it!
5- IF YOU CAN BUILD THE API yourself in a reasonable amount of time with similar capabilities and not a lot of re-inventing the wheel, I would definitely build it!
Good Luck!!
More information is needed about the business to help you. What stops a company building the product themselves if they're spending 500k+ annually on your version?