Monthly Archives: November 2012

Summer Reading

I’m finally getting around to sorting the various stacks of books lying around the house. So here are some of the things I read this summer, in no particular order.

Sabine Gruber: Die Zumutung. Nicht schlecht. Schreiben kann sie.

Martin Amis: Lionel Asbo. A wild ride. Not his best book by far, by anything by Martin Amis is better than most everything else, so definitely recommended.

Michael Palin: The Truth. Simply wonderful. Very well written and a great story. 

Albano Marcarini: La mia bici va a potassio. Full of deep observations on the beauties of cycling. And of the Italian landscape that he traverses.

Niccolò Ammaniti: Io e te. Great book, not too long, told from a young person’s viewpoint without any jargon. 

Ian McEwan. Sweet Tooth. Great book. Maybe not Enduring Love, maybe not Saturday, but almost up there.

Bill Emmott: Good Italy, Bad Italy.  Fairly detailed observation from a former Economist writer. But everything is pre-Monti, so it feels strangely dated even though it just came out.

John Jeremiah Sullivan. Pulphead. Oh boy this is good. He can really write. People compare him to DFW, which is wrong and misleading. But boy can he write. 

Niccolò Ammaniti: Il momento è delicato. All kinds of stories, old and new. Some real gems here.

Tyler Hamilton / Daniel Coyle: The Secret Race. Unputdownable. Good insight into professional cycling, both the industry and the mindset of the contender.

Marcus Samuelsson: Yes, Chef! Loved it.

Michael Chabon: Telegraph Avenue. A bit disappointing. Feels like he’s channeling Thomas Pynchon. Not sure if that’s allowed.

Pricing software that you deliver in your consulting business

Lately several discussions with consulting companies that have developed proprietary software tools as part of their toolchest and are now wondering if and how this could be turned into an additional revenue stream. Or where customers ask them to “leave the tools behind”. Which may be a good thing or not very good at all, depending on the specific circumstances. 

One thing is clear: The business of selling software products is very different from the business of selling billable hours. Which means that you need to be very careful and very precise in case you want to combine both business models.
There are a number of possible ways to approach this. Your best option will depend on your current market position, your strategic direction, your competitive environment, and on the specific nature of value-add that you deliver to your customers. Take a look at the following and see which works best for you.
“Proprietary tool chest“: You’re a consultant and you bring some special tools. They make your consulting services more attractive and more valuable.  The existence of these tools is communicated to the customer with lots of oohs and aahs and pointing out of secret sauce. But the tools are not for sale and never will be. Only specialists of the highest order (i.e. you and your team) are capable of operating this extremely complex machinery. Ordinary mortals need not apply. 
“Tools with service”: You’re a consultant and you have these tools. Your customer has seen them during the consulting engagement. There is an understanding that they will get value from deploying the tools even after the engagement has ended. But the tools really aren’t packaged all that well and so customer may have a hard time using them on your own. I’d address this by offering an ongoing services engagement charged at a fixed price per month with some kind of minimum duration and automatic renewal. It is then understood that the customer will get access to the tools, access to training and support, and access to any updates you may develop. 
“Stand-alone tool licensing”: You really want to develop a complementary revenue stream and license your products. This means that you need to make the packaging investment necessary to convince the world that you mean it. Minimally this would consist of a product sheet, a licensing agreement, a price list for purchase or rental, a list of refefence customers, etc. Pay special attention to pricing and don’t be afraid to put an obscenely high MSRP in the price list. This is, after all, the result of many years of your intellectual and financial investment. You can always be flexible on the pricing if the situation warrants it. And make sure that you have a mandatory training and support services infrastructure in order to ensure that your customer uses your tools appropriately and that you catch potential satisfaction issues as early as possible. 
One major pitfall to avoid are cases, where customer thinks that if they have your tools then they won’t need to buy your expensive services anymore. “Surely our in-house experts can take over.” Address by mandatory training, possibly even a certification program.