Build For The Small Guy
When you’re building a software app, you should build for the largest user-base possible, rather than the richest user-base possible.
I’d rather have $10/mo from 10,000 customers than $10,000 from 10 customers. It’s $100,000 per month either way, but if I lose one customer under the first model then it hurts far less than the second model.
Besides, if you build an app that enables to small guys to compete with the big guys, then the big guys will come knocking.
[From my blog.]
My little part in the greater Perl world.
I think any sane company would rather support 10 customers than 10k, profit being equal.
Having done both, I couldn't disagree with you more. When you have 4+ digits of customers you learn new and more efficient ways to support your customers, through building better products, documentation, and communities. I'm well on my way to 6 digits with one now, and its becoming easier as we go.
BTW, I don't want you to think that my way is the only way. Do what works for you. This has just been my experience.
I've done both. I agree with JT.
It might seem like you'd want higher paying customers, but when they are paying a lot of money, they have many demands. You end up writing custom software with features only they want and that you can't sell to anyone else. You constantly worry that they are going to leave because they tell you that. It's really easy to lose most of your revenue, even for the stupidest of reasons. It's difficult to replace that.
With 10,000 customers at a low price, they take what you offer. You have to support what most people want, not what one big customer wants. If 10,000 people want what you have, there's probably another 10,000 out there that want it. Your customers become your ad hoc sales force and community support crew.
From a developer standpoint I completely agree and would rather have as many people using my product as possible.
From a business standpoint we've found raising our prices led to more sales, so we didn't end up becoming a slave to a few clients. The feedback we get is more valuable, and they complain a lot less. The 10k adhoc sales force is missing, but what is its net value when weighed against whatever fixed cost each customer has? Being used by a big customer is worth its weight in sales force, adhoc or not. This is all anecdotal, but it doesn't appear uncommon from what i've been reading in other blogs.
Our software, however, is not the type of software that we could ever sell 10k copies of, let alone for $10. There is a big discrepancy between a $10k piece of software/service and a $10 one, so it is hard to compare our arguments. I suppose my real argument would be to leave the pricing out of the developers hands and let a number cruncher figure out what your user base should be :)