It is not hard to think of new ideas but finding one that will return a financial benefit is a different story. Below are some thoughts on turning ideas into commercial software products. 

Immediately after your eureka moment, consider how you or your team actioned ideas in the past. If you failed to show perseverance and enthusiasm in those projects, you should think carefully before committing effort on a new one. Turning an idea into a reality requires dogged determination, usually because the fun is at the beginning and diminishes as time goes on. Embarrassingly, this is what my self-appraisal looks like - notice that, unsurprisingly, the fun part requires no work, and that the work part is no fun:

Project Stage

Fun Factor (%)

Actual Effort (%)

Idea conception

35

1

Idea development

35

2

Market evaluation

5

5

Fundraising

1

10

Product development

15

5

Product testing

5

5

Marketing

1

60

Selling

2

10

Invoicing

1

2

From this, you can see that the viability of an idea needs to be assessed early, well before the effort (and cost) begins.  The challenge is that ideas are hard to trash when the fun factor is high! To help you assess an idea consider the big questions first:

  1. How do I achieve mass acceptance?
  2. What is the revenue model?

Without solid answers to these questions, your idea will probably go nowhere.

Mass Acceptance

Products tend to be suitable for either a niche or for the mass market.

Niche products are usually significantly cheaper to bring to market and you can pick up new customers by simple directed advertising, for example via the web and social media. You also have the advantage that like-minded businesses will quickly spread the word to each other if the product is good. Of course, the best niche market ideas are those you can upsell or cross-sell to existing customers. If your idea targets a niche market you are starting off well.

Marketing a product to the masses is a very different ball game. Some products are worse than others. Consider Uber, where a threshold number of both drivers, and passengers, was required to make it viable. To mitigate this, Uber launched in San Francisco and began to develop their ideas there. This minimum viable market allowed them to test the waters with a reduced marketing budget and raise funding to take on the world. If your idea targets a mass market with threshold dependencies like Uber, you have some work to do as this is the most challenging of tasks.

Don’t be discouraged from taking the world by storm but just realize the significant cost, time and effort of the task ahead of you.

Revenue Models

In a world where so much is free (particularly with software), it’s often difficult to find an effective revenue model. The following ideas may work with your idea:

  • Custom build: Product is manufactured for a known client who will pay for the build. Alternatively, build the product with a speculative client in mind.
  • Direct sales: Product is sold outright to the public, or to businesses like wholesalers and manufacturers who will resell it to the public.
  • Software license: Customer buys a license to use the product.
  • Subscription license: Customer periodically pays a set fee for use of a product:
    • User-based: Charging relates to the number of users, or “seats”
    • Volume-based: Charging relates to the volume of resources used
  • Micro charging: Customer is only charged for the use of resources.
  • Shareware: Users freely share copies of the product and may, or may not, pay for it:
    • Donationware: Product owner requests an optional donation be paid
    • Nagware: Shareware that reminds the user to register it by paying a fee
    • Crippleware: Some features are disabled until the user purchases the product
    • Freemium: Product is free but advanced features are disabled until a license fee is paid

If you are unable to generate revenue from your idea, and that is a prerequisite, consider approaching other companies in similar spaces. They may be interested in working with you to advance your idea.

Conclusion

Idea generation and product development are exciting and fun but if you are looking to generate revenue there are some cold realities. When developing your idea try to design it so the marketing and revenue gathering challenges are made easier. If you cannot clearly see a way to market it, or to make money from it, why waste time advancing it. You are just wearing out your enthusiasm!