Business models for a software component
My company has developed a .DLL, meaning a software component, which needs to be a part of software to have value. This software component can be useful in a range of applications in everything from small projects, to large enterprise projects. My question is: How can I make money from this component? In other words, what are the viable business models for such a software component?
Software Business Model Business Services
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Sounds like you need to form partnerships with software manufacturers and see if you can license it to them (or sell it outright). The question is how much value does the .DLL add? Does it solve a problem for them that they can't solve themselves? – Susan Jones 14 years ago
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what does the DLL do? – Tim J 14 years ago
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It is an OCR component, which is very generic. I did not want to provide this detail, as I would like the answers to be general so they can be reused for other startups in the same situation – David 14 years ago
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How about going after some vertical niches as well? Or contact development shops that have software for a vertical? – Tim J 14 years ago
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Is this the primary product, or was it something you needed to have and built one, now you want to product-ize it? – Tim J 14 years ago
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It was something I needed myself and got it built. Your idea of going after a vertical niche as well is a good one. It should be mentioned as an answer to the question. – David 14 years ago
5 Answers
Some revenue models that I have seen:
- Sell the license to the DLL for end users
- Give away the component and sell consulting and services
- Sell or give away the DLL and header files to developers and then they pay royalties for redistribution
- OEM/license the software component for others to package
- Sell/license the source code
If we knew more about the component and the market we might have better ideas.
There are online retailers for commercial software libraries. One possibility is to partner with an online retailer to sell your component. Take a look at Programmer's Paradise. Here is an example component that they resell.
There are also differences between developer licenses (the right to use your component to develop software) and redistribution licenses (the right to include your component in shipped software).
ComponentSource is a marketplace for components. They even have a DLL section. You can try to sell you component on similar web sites.
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That is an excellent source! – David 14 years ago
Everyone's comment should be useful to you David - they are all good comments.
If priced right you might also look into advertising the component on CodeProject. It's expensive.
However before investing in that type of expensive marketing it's always best to get it out there on the sites that have been mentioned in this thread and then gauge feedback on quality etc.
Nathan and Tim also made a good point re the licensing. Royalties could be a very good source of recurrent revenue for you but they might also be deal-breakers.
We are a software component company, although not so much in .NET. ComponentSource, mentioned, is the largest reseller, but they go for a much tighter linked relationship with you, it's not to everyone's taste. You also get sites like DevDirect, which is very .NET centric and cheap to use simply to advertise, rather than partner-based models like ComponentSource.
How you pitch depends very much on the price point of the component and the key with pricing is to remember you always have 2 initial competitors:
1) Customer implements themselves
2) Customer doesn't bother implementing at all and cancels project.
As well as any actual competitors.
The software component business behaves slightly unlike many other software businesses, if this is your first component, you're in for an interesting ride.
