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I was wondering, is there an economic rationale in developing and marketing a small tool (standalone or rather plugin)? Of course, let's assume that the tool does indeed solve a real problem from the production process. And by small, I mean an application that can be developed by 1-2 developers within 2 years. Do you know any contemporary success stories? I have two observations that make me wonder:

  1. Anyway I turn around people ask for free and preferably open-source tools. Even when the price is low, and the software is worth its price, I see this big reluctance to spend any money on commercial development software. An application author would probably have to assume that only a very small percentage of all people who might find his application useful, will actually purchase it.

  2. I've seen a few good commercial software examples that after some time started offering free licenses. The most notable example for me was gDEBugger from Graphic Remedy. Last time I checked it didn't even had any worthy competitor (commercial or noncommercial) in the market of OpenGL debuggers. I have no idea what might have made them do that, other than poor sales.

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syntevo.com seem to be an example of doing this successfully. –  Benjol Nov 1 '11 at 14:38
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4 Answers

Some things to consider if you want to be successful in this market:

  • Quality is key. Nobody will spend money on something that sucks.

  • No matter the cost, identify the searchable keywords and make sure that you are on the first page of Google search results, no matter the cost.

  • Keep an eye on open source up and comers. They can threaten your company, especially if they are almost as good or better than your product. Try to stay ahead of them in functionality and use. If that simply won't work, identify the lead contributors to the project and offer to hire them and pay big money. This can sometimes kill the project that threatens your company.

  • Put up a pretty site with good literature and good graphic design. Contract out the web design, it is well worth the investment. Nobody will want to buy your product if the site looks amateurish.

  • Offer a free trial, preferably one that has full functionality but expires after so many uses or after a set amount of time. You want people to see how convenient and awesome it is, and then word of mouth will spread it throughout their friends and the company. Companies tend to have budgets for developer tools, I convinced my company to buy a third-party proprietary merge and diff tool that is amazing, and everybody loves it.

  • If you do not offer a trial, give 95% of the functionality for free, but make integration, interoperability or other "enterprisey" related functionality require a full license. Developers are notoriously stingy, corporations are a little easier to convince.

  • Keep your team and your company lean and mean. This will keep costs down and make sure you keep the team focused.

  • Start thinking about other similar ideas for tools and try to get as many of them out there as possible, hopefully on completely different sites. Chances are 7 will fail completely, 2 will be moderately successful, 1 may be a huge success and cash cow.

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In addition to Maple_Shaft's answer, I've found that a lot of open source competitors to commercially developed software follow the Pareto principle fairly closely unless they have a large base of developers.

Put simply they solve the easy 80% of the problem, and leave the hard 20% alone. It very well may be that the last 20% is too localized to be developed in a general sense and requires additional insight that the end user can provide.

You need to be certain that you've addressed the hard parts of the problem well to make an investment in your solution better than "getting by" with whatever's available on the market. You need to emphasize customer service, access to developers to address specific problems and a track record of reliability.

Otherwise what value are you adding to what they can achieve for free and a little work?

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+1 about solving the HARDEST parts of the problem. –  maple_shaft Nov 1 '11 at 12:36
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As you asked for examples: Tasktop would be my pick, the basic functionality was done in less than 2 years and it's definitely a success story.

Their choice of open-sourcing the basic tool right from the start and providing enterprise features commercially worked out perfectly. There are no competing tools because the basic functionality already is available as open-source which stops the hackers and there is no business case for developing competing enterprise extensions which stops the professionals.

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Often it takes a lot of effort and time to be allowed to spend even a small account of money.

You are then often expected to do an eval and decided on a corporate level what tool will be used for the job by everyone, hence having to a get agreement from a lot of people.

Then there is this cost of tracking licences on a companywide bases, including tracking what is installed on each developer’s machine, often there is a rule that no personally owned licences may be used on work machines.

Is this enough to explain a “big reluctance”?

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