IT spends and subscription based products

Wow, that app is great. That’s what I was looking for. Wait there is a purchase button. It says 40$/month. But it’s an alarm clock. Why are subscription charges so high for basic apps? If I build an app, will people pay 30$/month? Let’s find it out.

I will be interchangeably using subscriptions and spends in these blog posts. I am covering IT or technology spends in these blog posts. Some of the spendings can be one time, recurring subscriptions, pay if you are willing to or donate.

Are subscriptions/spends needed for computer/business owners?

I would say it varies because it’s not a level playing field here for all businesses. Some customers are okay with compromising on security because they do not have any data of value or they do not care about it.

For a person like me, data is incredibly important so I subscribe to tools/software which cares about data as much as I do.

If you do not care about legal or data security aspects, then software subscriptions may not be needed. Such people tend to rely on hacked or pirated software for their needs making software costs almost zero.

How to conduct business or work amidst rising IT spends

  • Develop profitable software by pioneering in a domain

  • Develop subscription-based products for any niche

  • Develop software or provide consulting for other customers

  • Develop software/hardware at the intersection of technologies like agriculture plus technology

As a business owner what are the must-have software subscriptions?

It depends on your industry. If your software development team is working within a workflow that needs JetBrains products then a JetBrains subscription is needed. As a business owner, you might ask why do we need JetBrains when vs-code can do the job.

Let’s say an employee charges 50 dollars an hour. Due to vs-code, the employee loses 10 hours of work time annually. The company faces a loss of 500 dollars per employee per year. But with Jetbrains products the employees save 10 hours annually, then the business receives a gain of 500 dollars per employee per year.

Though I am not favoring JetBrains products, I wanted business owners to see software subscriptions/spend as an investment for your business.

Case study

Here are the software subscriptions/spends running under the hood for running this blog Dhbalaji. dev or for my software development works.

One time IT costs (mentioned in INR)

  1. High performing laptop (70k) for getting work done quickly, mid-range phone (20k)

  2. Windows pro (8k) for BitLocker encryption and other features

  3. Extra monitor and accessories (20k)

Recurring costs per year (mentioned in INR)

  1. Antivirus complete (1.5k)

  2. IntelliJ IDEA ultimate IDE(10k)

  3. Domain, email, and hosting (10k)

  4. MS Office and others (5k)

If you are a thrift business owner, you may debate upon these spends

  • Is an extra monitor, keyboard required?
    Extra monitor speeds up development activities. Extra keyboard means fewer repairs expected on the laptop keyboard.
  • Is MS Office required?
    If I had to draft a letter in the libre office, I take 1 minute. But in MS office I take 5 minutes because the formatting controls are well laid out and it’s easy to use. I save time here.

    Business owners instead of taking sides should do a cost-benefit analysis. Please use the software until the free trial before purchase. I had purchased incompatible antivirus before use, we wasted both money and time.

Things to know before developing a subscription-based product

  • If there is no competitor taking money for a similar service then there is no market. For instance, there is no paid facebook service. If you ask for money then they will walk away.

  • Understand jargon like landing page, funnel, product page, checkout page. Understand digital marketing and having a good social media presence. Self-service is a tried and tested way to sell exponentially. Imagine the Netflix sales team going door to door. It would have been a small business. People should be aware of your business and if needed subscribe themselves.

  • Have a free trial for the whole team

  • Have a flat price wherever needed that way the most paying customer does not get to decide which feature the engineering team works on. This is done excellently by the basecamp team.

  • The software development costs can be high when you add a lot of features trying to overdo the competition leading to lesser profits and clunky software.

  • Try to have a dedicated customer support team when your software is critical for other businesses.

  • Try to see if you can import data from other sources easily. Like moving employee details into your system, etc.

Summary

We are not going to subscribe or do a lot of IT spend. So be judicious but consider spending when it’s profitable. Sometimes the benefits may be intangible.

When developing IT products (SASS products) for others through a subscription model, try A/B testing and see if your software has the potential to sell before you build the complete software which nobody uses. Once your software is crucial to other businesses, the subscriptions get renewed and customers market your product.s

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