The Best Pricing Model for non-FEM Structural Software - KootWare 5

[KootK]

The Mission

While I'm still above grade, I intend to create a suite of pay for play, online structural engineering tools (KootWare). And I feel that a big part of making this questionable venture a success -- or at least improving the odds of a contained failure -- will be arriving at a good pricing model. Frankly, this is something that I feel that other developers have done poorly, to their detriment. As such, I'd like to solicit feedback from the hive with respect to the pricing models that I'll propose below and any possibilities for improvement.

The Basics of What You Need to Know About the Offering

1) 100% online offering. No option for a local, perpetual license version.

2) The goal here is not to get rich. The goal is to extract enough income from this that I can justify pouring a lot of effort into a project that I expect to enjoy a great deal.

3) Spit balling, if I could create enough value that I could convince 1000 SE's to part with $5/month, that would be enough. Or any other combination of numbers that gets to the same place. How many software using structural engineers do we think exist in North America anyhow? Sixteen? Eighty thousand? I really don't know.

4) Think something along the lines of TEDDS, ENERCALC, or Jabacus on steroids. I do have ideas for, in my opinion, greatly improving upon these offerings. I'd like that to be a separate conversation however. For now, make a leap of faith and just assume that it will be awesome.

5) I intend to attach some manner of structural only, online forum to the offering. While it would be a free-form space for conversation, as Eng-Tips is, it's ostensible purpose would be to provide a place for me to provide responsive help to anybody designing stuff utilizing the software. Thus making the whole thing even more fun for me. This would be offered in addition to the usual help guide and verification manuals etc <-- edit added per skeletron's comments.

Some Obvservations that I Have Regarding the Pricing Models of Others

6) For software of this type, I feel that a monthly subscription pricing scheme would not be well received. As a small outfit my self, I loathe taking on any additional "monthlys", no matter how great the ROI seems to be. I'm always afraid that I'll use it twice and forget to cancel. I doubt that I'm the only one who feels this way.

7) I also don't think that a straight "pay per use" model is the way to go either. Design is an iterative process and software licensing needs to reflect that. Sadly, I don't just design a shear wall once. I probably design it half a dozen times before all is said and done. And I can't be losing my shirt on pay per use while going through that process.

8) One has to assume that anything that can be abused, will be abused. This will prevent me from being quite as customer friendly as I would otherwise wish to be. My own IP halo gets a little dirty from time to time so no judgement here.

Pricing Model A

This is my favorite of the two and would appeal to me as a customer. Keep in mind than none of the particular values are set in any way. It's really more about the structure at this point. That said, if anybody has thoughts on what the numbers ought to be, I'd welcome that too. I figure I'll adjust as use data starts to pile up but I'll still have to start somewhere.

1) Create an account at KootWare International and add a credit card, paypal etc.

2) Buy yourself some quantity KootWare credits. $10. $100. Whatever. Little gold doubloons in your digital purse.

3) To access the retaining wall tool for use, you pay $5. After the first run, you have the lesser of 20 additional runs or 60 days to keep using the tool on the original $5. One "run" would represent one execution of a full design with detailed output. <-- added per skeletron's comments.

4) If you want to share your account login and credits with somebody else, that's your prerogative. Share it with your coworker, a school chum in Brisbane, your aunt... retaining walls for everybody on that original $5. But, no matter who's using, it taps out after 20 runs or 60 days.

Pricing Model B

1) Create an account at KootWare International and add a credit card, paypal etc.

2) Buy yourself some quantity KootWare credits. $10. $100. Whatever.

3) You can use any tool your like, for free, but you can't get a detailed printout for your calcs until some money has changed hands. The software would tell you the basics of what passed and what failed and would allow you to save your file to the system for future retrieval. I kind of like this in that it would allow one to essentially do their preliminary design work for free. I could allow folks to printout their inputs in case they were worried about my going bankrupt before they get to IFC.

4) When you've got all your design settled and ready for final calc documentation, it's $5 per print. The trouble with this is, I couldn't let the user see the detailed printout ahead of paying for it. Otherwise, I'll wind up with a bunch of folks just doing screen capture etc.

 

[Huevo]

I'm also not sure what the attraction of on-line applications is.

It's always up-to-date. No more downloading updates or dealing with compatibility issues between versions of software.

 

[KootK]

So having the option for a long term single payment investment would be nice.

Just take my $50-$100 USD per month per user (or whatever it would need to be) and get the accounting people off my back.

At some point, one has to stop telling people what they should want and start responding to what they do want. So I guess that I'll have to come up with some kind of flat rate monthly or a monthly cap. I'll just have to sort out the mechanics of how to do that without it being abused. I'm still definitely going to offer a per-use-ish option though and push for that to be the dominant model. I just see too many competitors in this space flailing with subscription models and I need this as a differentiation vehicle.

They are much more likely to go for something that is a known constant cost as opposed to something that varies based what types of projects we are doing at that time

Suspend disbelief for a moment and take a walk with me through and alternate universe where being able to break down software costs per project was actually considered desirable. Something like this:

1) The platform allows you to set up "Jobs" even if pricing is still per tool use (20 run / 60d or whatever).

2) You can attribute each tools use to a particular job.

3) At project closeout, you'd run yourself sort of an invoice indicating KootWare costs for the job.

I almost feel as though this would be the ultimate in project accounting. Moreover, I feel as though it would help to shift things towards what I would consider to be the correct mindset: viewing each successful use of the right software as a savings to the project rather than a cost. Manpower vs computing power.

Huh-huh??? Any curb appeal??



HELP! I'd like your help with a thread that I was forced to move to the business issues section where it will surely be seen by next to nobody that matters to me:

http://www.eng-tips.com/viewthread.cfm?qid=456235

 

[Huevo]

I just see too many competitors in this space flailing with subscription models...

Is this truly the case? Are they flailing because of the subscription model?

 

[KootK]

Is this truly the case? Are they flailing because of the subscription model?

Cause and effect is tough to parse out of course. How about this:

1) It seems to me that many are not succeeding and the majority are rocking subscription models.

2) The natural way for me to view the world is as myself. And I absolutely loath signing on for subscription model software in the small time, non-FEM space. This is probably the same aspect of my personality that keeps me still wasting gobs of time torrenting movies and television rather than just paying two cents per month for Netflix. Am I a one man anomaly in this? Dunno. Hence this here focus group testing.

HELP! I'd like your help with a thread that I was forced to move to the business issues section where it will surely be seen by next to nobody that matters to me:

http://www.eng-tips.com/viewthread.cfm?qid=456235

 

[KootK]

Are they flailing because of the subscription model?

My sense of this, which I cannot prove, is that once you reach a certain threshold of price and required customer commitment, there's really a good deal of pressure to justify your existence as a vendor. This will sound weak but I really don't relish having to justify to someone why KootWare really would be worth $50 per month every month. And not just worth that amount monthly but, also, a better value than other monthly options priced similarly. You know, because I would be a pretty tough sell for this were roles reversed.

I see it much as Celt described:

...there is the "F it why not" price and then there is the "eh this looks cool but I'm not paying that" price.

I feel as though the F-it price is the only way to access otherwise difficult to change hearts and minds. If feel that people may be convince-able one tool use at a time in a way that they don't seem to be "one costly month of unlimited access" at a time.

HELP! I'd like your help with a thread that I was forced to move to the business issues section where it will surely be seen by next to nobody that matters to me:

http://www.eng-tips.com/viewthread.cfm?qid=456235

 

[KootK]

Part of our disconnect here might be that:

1) Some of us are coming at this from the perspective of "accounting departments" whereas;

2) Others of us are coming at this from the perspective "lean as lean can be startups".

I want all of #2 and the smaller scale end of #1 ultimately.

HELP! I'd like your help with a thread that I was forced to move to the business issues section where it will surely be seen by next to nobody that matters to me:

http://www.eng-tips.com/viewthread.cfm?qid=456235

 

[Sparweb]

Here I come to drop poo all over everything again.

Your idea sounds more and more like what this guy is doing for aerospace:

https://www.abbottaerospace.com/

The link is a spreadsheet that calculates the fastener load distribution in a material splice.
He has done hundreds of these, all free downloads. There is a polite request for donations.
Sorry.
Why does he do this?
It's like an extension of his resume.

Another example? Medeek
Also free. This one may be meant to attract customers to an existing business, which has architectural plans for sale.
Presumably for those who don't want to use the calculation pages. Their loss: it's a pretty website.

No one believes the theory except the one who developed it. Everyone believes the experiment except the one who ran it.
STF

 

[WinelandV]

3) At project closeout, you'd run yourself sort of an invoice indicating KootWare costs for the job.

I almost feel as though this would be the ultimate in project accounting. Moreover, I feel as though it would help to shift things towards what I would consider to be the correct mindset: viewing each successful use of the right software as a savings to the project rather than a cost. Manpower vs computing power.

While I see this being a plus for small, lean, startups, I worry that such tracking tools could lead to further commoditization of engineers in big companies. "Well, Bob did a similar analysis with fewer runs. We need you to start reducing your analysis costs."

Just a semi-related "larger" thought. Feel free to ignore.

 

[structSU10]

What if you offered two options - the # of runs option and the unlimited access monthly fee option?

 

[KootK]

"Well, Bob did a similar analysis with fewer runs. We need you to start reducing your analysis costs."

Truly, the idea would be to provide so many runs with each $5 tool purchase that no one would ever find themselves paying more than once for any individual design / project. I'd plan to monitor usage somehow so that I could adapt the pricing structure to ensure this was the case.

What if you offered two options - the # of runs option and the unlimited access monthly fee option?

It sounds as though this is what I'll have to do. Just gotta sort out the mechanics of that without opening it up to rampant abuse. My tech skills aren't strong enough that I quite know how it would work to try to limit usage to a single IP address etc.

I actually want the software, and user's accounts, to get passed around like a bong at a frat party. The more utility folks are getting out of the thing, the better. So, whatever I do, I don't want to wind up with anything that's locked down too tight.

HELP! I'd like your help with a thread that I was forced to move to the business issues section where it will surely be seen by next to nobody that matters to me:

http://www.eng-tips.com/viewthread.cfm?qid=456235

 

[GC_Hopi]

This idea reminds me of CivilAx or AISC tools The pain is keeping the tools up to date with the latest code.

 

[KootK]

This idea reminds me of CivilAx or AISC tools The pain is keeping the tools up to date with the latest code.

Not much like AISC tools as it won't be discrete spreadsheets for download. Closer to the Civilbay / Jabacus example but at a much grander scale.

Keeping the tools updated to the latest code would really be part of the fun for me. I like programming.



HELP! I'd like your help with a thread that I was forced to move to the business issues section where it will surely be seen by next to nobody that matters to me:

http://www.eng-tips.com/viewthread.cfm?qid=456235

 

[GC_Hopi]

The programming is less of an issue. It's easy enough to hire people for that. The complicating factor is locating and interpreting the changes. Are you planning on pricing based on the code edition? Or a one time cost to upgrade your account to the latest code?

I would be interested in the scope of this software...material, code, customization but that is another post.

 

[Yao1989]

I am so used to monthly model I never quite thought about anything otherwise. That said, the mix of per run model does appear to make more sense from the you pay for what you use.

Perhaps a tiered pricing model of how much you use the tool?

Here is what I am thinking, you sell by the module:
[ul]
[li]Free trial have 3 runs 1 days and no print ability. For each module[/li]
[li]$5 gets 20 runs or 30 days[/li]
[li]$10 gets 100 runs or 60 days[/li]
[li]$20 unlimited 120 days?[/li]
[/ul]

And then discount for buying multiple module
[ul]
[li]2 modules - 10% saving on each module[/li]
[li]Interpolate here[/li]
[li]10 modules - 50% saving on each module[/li]
[li]$400 gets you unlimited use of all module for 120 days.[/li]
[/ul]

Pricing and discount options are purely arbitrary, I am just suggesting a pricing model.

 

[NorthCivil]

If you want to hit the Canadian market, why not get in touch with jabacus and see where you can take it together?

Mr Jabacus is already bookmarked to 60% of the market's browsers, that's instant access to the majority of the market.

sidenote: if the site starts to get serious traffic, there could be serious money to be made from the advertising alone. might be no need to charge, if you have 20,000 visitors to your site every day

 

[Eagleee]

these are very initial points as i have just finished reading the thread. will come back most likely this weekend with a more detailed post. until then, 3 quick things:
1. i believe this is a fantastic idea and the sort of thing that could really take off.
2. have you considered also targeting the european market? i guess this would result from a careful assessment of the extra works implied due to european standards vs the benefit of getting many more clients.
3. your comment on video games is spot on. i believe getting inspiration from business models outside our industry can provide quite an advantage. i will elaborate in my next post.

 

[KootK]

Here I come to drop poo all over everything again.

Defecate all you like. One of the goals with this thread is to solicit exactly the kind of tough love feedback that might dissuade me from doing this.

Your idea sounds more and more like what this guy is doing for aerospace:

https://www.abbottaerospace.com/

There are similarities but also important differences, including:

1) I plan to do web apps rather than discrete, downloadable, spreadsheets.

2) My stuff will be as close to free as I can make but not free. I'll not be asking for donations.

This on steroids is really the best way to think of it: Link

Why does he do this? It's like an extension of his resume.

Something to do with passion I suspect.

HELP! I'd like your help with a thread that I was forced to move to the business issues section where it will surely be seen by next to nobody that matters to me:

http://www.eng-tips.com/viewthread.cfm?qid=456235

 

[KootK]

This idea reminds me of CivilAx or AISC tools The pain is keeping the tools up to date with the latest code.

The programming is less of an issue. It's easy enough to hire people for that.

1) It would be different from AISC tools etc in that it will definitely be web apps rather than discrete, downloadable spreadsheets.

2) Keeping up with the code should be easy given that it will be web apps easily controlled server side.

3) I foresee no issue with the manpower associated with keeping with code updates. I plan to do every scrap of this myself as I absolutely love coding.

The complicating factor is locating and interpreting the changes.

4) I also foresee no issue with this. As a practicing engineer, I already do this. And it's really the nexus of structural engineering and coding that I see as my sweet spot so I'm quite looking forward to managing that process personally.

Are you planning on pricing based on the code edition? Or a one time cost to upgrade your account to the latest code?

No pricing based on code edition. I see it like this:

5) All tools kept up to date with latest code version.

6) As time marches forward, tools based on outdated codes would remain for use.

7) I'm not sure if I'd be willing to create modules based on outdated codes right at the outset. Would have to way effort vs expected usage for those.

8) Purchasing the module for any particular tool would grant you access to all available versions of that tool.

I would be interested in the scope of this software...material, code, customization but that is another post.

9) All materials and all north american codes and standards to begin with. There will be differences but, for now, a good way to think of it would be similar to Enercalc but presented as online applications.

HELP! I'd like your help with a thread that I was forced to move to the business issues section where it will surely be seen by next to nobody that matters to me:

http://www.eng-tips.com/viewthread.cfm?qid=456235

 

[KootK]

Perhaps a tiered pricing model of how much you use the tool?

Thanks for the input, I'll take that under consideration. With regard to pricing, the three dominant fears out there seem to be these, depending on who's doing the talking and what their situation is:

1) Monthly subscription. Will the value justify the cost and commitment?

2) Pay per use. Is this stuff legitimate and how can I have cost certainty?

3) Tiered. Is this so complex that I'll not understand it and wind up screwed at the end of the month?

Of course, on the other side of every fear "coin" is a "hope" that can be spoken to. Better men that I have failed at this but, ideally, I would find some way to speak to peoples hopes rather than their fears. And this is part of what's steering me towards a temporally short space of time between expenditure and ROI. Every time that someone uses a tool, I want their perception to be that they're saving money, not spending it. I want to pull engineers to KootWare rather than having them feel/be pushed.

HELP! I'd like your help with a thread that I was forced to move to the business issues section where it will surely be seen by next to nobody that matters to me:

http://www.eng-tips.com/viewthread.cfm?qid=456235

 

[KootK]

If you want to hit the Canadian market, why not get in touch with jabacus and see where you can take it together? Mr Jabacus is already bookmarked to 60% of the market's browsers, that's instant access to the majority of the market.

I can't tell if you're being facetious or not but I very much like this idea. I think that strategic partnerships hold a lot of promise and I'm open to them.

Along these lines, I've also considered partnering up with the solo purveyors of some other software packages. Through my specialty engineering practice, I currently use some neat stuff developed my older guys that have to be considering retirement in the next 5-10 yrs. I'd much rather negotiate a way to roll these things into KootWare somehow than to waste all that intellectual capital by just reinventing the wheel. I'd like to name names but this would probably be to speak out of turn on a public forum. In this way, these tools could get the updating that they need and the developers could continue to get paid well into their dotage. Although, like me, it's entirely possible that what these guys want is to still be playing with their toys well into their dotage.

HELP! I'd like your help with a thread that I was forced to move to the business issues section where it will surely be seen by next to nobody that matters to me:

http://www.eng-tips.com/viewthread.cfm?qid=456235