Customer is asking for On-Premise solution
Hi,
a few weeks ago I started a little side project and tweeted about it. Yesterday, I got a DM from a software engineer which is working for a big corporate. He seems to be interested in the project and asked if I'm consider to open source the source code. After a few message back and forth he shared that policy wise his company enforces to be all services within their network and therefore he needs to host and run the app himself. So far I was considering a hosted version with a user subscription model only. However, now I need to think about a On-Premise solution.
The app is quite simple, but it does the job and works pretty well. I have a few ideas how to extend the app. However, I'm undecided how I should continue our conversation. I'm definitely interested in getting the app installed within this company, but I don't want to do it for free. I was thinking to offer him a few packages like:
a) 30 day trial
b) One year subscription for 10.000 user
c) One year subscription for 10.000 user + support + all upcoming features.
Do you think this is a good strategy?
Finally the most interesting question, pricing. The app is simple and in theory he could build the same thing on his own. Therefore I need to find a sweet spot which is high enough for me to invest more time in building this On-Premise solution, but needs to be low enough to get the purchase order. Any ideas how to find this number or other tips how to deal with this?
Thank you
Stefan Bürger
Thanks all, you left a lot of really helpful comments. However, I see a lot of value in such a on-premise solution for other companies too which may have similar restrictions. I'll try to pitch it rather pricy so at least it's worth all the effort.
Personal opinion is that self hosted sounds like a pain to build and support / set up. If it was me I'd charge a ridiculous amount and use the money to outsource the work to focus on building your SaaS. Everyone had a price though :)
I don't know your product, but I have had some limited success with on-premises licensing of SaaS products:
In my experience programmers at big corps don't have a lot of budget authority. They'll get a thumbs-up from their manager for smaller purchases (<$1k) that they can buy themselves and be reimbursed when they file an expense report.
Larger sales will probably require your contact to become an advocate/champion for the idea to get approval from somebody with enough authority. You'll want to also work that individual or the deal could cool off. This path can take a long time to get the right approvals.
If your product has to do with training you might find it easier - usually there's a bunch of training budget they can tap into easily.
You'll have to cross that open source hurdle. Why did they lead with an OSS request? Perhaps OSS is codeword for 'free' or perhaps your contact wants the code to build a derivative product and is more interested in a licensing opportunity than the product.
If you want to go down this path it's probably best to get on the phone with your contact and try to suss out what they're trying to accomplish, what authority they carry, how much it's worth to them, and what the next steps are (ie: who else in their org needs to get involved) in helping them get your software.