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If you’re making software for businesses, there are four kinds of things you might be doing:
- Outsourcing. “Tell me what solution you need and I’ll make it for your”. Example: (often offshore) companies that are selling development for an hourly rate.
- Consulting. “Tell me what your problem is and we’ll figure out the solution together.”
- Productized service / customizable product. “Here is the problem, here’s the solution, let’s apply it to your business”.
- Products. “We know you are having this problem and here’s the exact solution you need”.
From my perspective, this is all about understanding the problem. The more you know about your customers, the more value you can provide and the more money you can charge.
If you’re doing outsourcing, you’re competing with thousands of other software providers. Your profit margins are probably not so high as you’re competing with thousands of other companies Continue reading