Ask HN: How do I sell my expensive niche software w/ no sales background?

[consultant]

A little over 2 years ago, I quit my full-time job and began freelancing. The vast majority of my work has come from one particular group of customers at a University. I've been paid 10-20k dollars on 3 separate occasions to develop a web application for this niche, I have another customer who will be paying me a similar amount in the fall when I work with him, and there is another customer who wants something similar but doesn't have the funds yet.

This niche is academic in nature and as far as I know the money comes from grants. I have never signed any paperwork, I have simply built what they wanted and been paid. I have a great relationship with these customers and have already discussed the fact that I might try to sell a product like this to other institutions, which they are fine with. I am confident that I can extract some core components that are useful in this niche, rewrite the app (there are things I want to improve), and create a product that would be useful to other similar institutions. However, I don't actually have many connections in other cities yet, nor do I have any experience in selling a piece of already-developed software for tens of thousands of dollars to people I don't know. All of my business has come through referrals. What I _have_ done is spent a few years talking to the customers, answering emails of the users of the app, developed several different versions of it, and been able to successfully charge money by the hour for development. So I feel like if I only connect a few more dots, there is a great business here. So now I'm trying to decide where to go with this, and could use some help.

So I have a few questions:

1) If a piece of software would cost tens of thousands of dollars to develop from scratch (possibly more when considering the development has required the time of many highly paid individuals), would it be reasonable to charge someone five figures for a packaged solution, and also charge a high consulting rate for customizations and integration with the customer's data? Note that this software isn't being sold to mom and dad or your friends, it's being sold to large, state and federal funded organizations, and there aren't many solutions out there.

2) How does one go about learning to sell? Especially a software product that is expensive, but probably wouldn't sell that many copies, maybe a thousand copies. Any books you recommend? Do I just find the proper contact at the institution and call them up? Tell them about what I have and show them a demo? Do I need to get a sales guy? Do I need to fly all over the country and show the software in person? Would someone be willing to buy an expensive piece of software based on a screencast and examples of a couple of other customers that use it?

So there you have it. I'm trying to make the transition from consulting to selling a product, have a couple years living expenses in the bank, and have someone willing to pay me while I work on it for the next few months. But now I just need to figure out where to go next. Obviously I will sell the first copy to the client I am planning to do work for in the Fall. But what should the next step be? My first thought would be to just start cold calling potential customers, which I have never done. Any help you can offer would be appreciated.

[ankeshk]

1. Pricing:

If your clients pay for the software from grant money - find out about these grants before deciding on your pricing. People won't have a lot of hesitation on price if its not their money - but grant money - that they'll be spending.

So find out what kind of grants your clients opt for. Whats the average value of that grant. Is it a specific purpose grant? And fix your pricing accordingly.

2. Book recommendations:

i. How I Raised Myself from Failure to Success in Selling - by Frank Bettger (The best book on selling I've read)

ii. Bag the Elephant - by Steve Kaplan (Book for selling to big clients)

Jeffrey Gitomer books on selling are also good.

3. Selling Ideas

Record short interviews with your current clients. Ask them the following questions:

i. What was your perception about my product / solution before you bought it?

ii. How has that perception changed?

(Answer to the above 2 questions gives you the before-and-after scenario. Powerful testimonial stuff.)

iii. What is the biggest benefit you gained from using my product?

iv. What are some other benefits you received?

v. Do you think the price is reasonable?

vi. Would you recommend the solution to others?

Obviously - ask for their name and title and stuff too.

Record such 10 minute interviews. Compile all the interviews in 1 DVD. And you have a very powerful sales tool.

Using such tools work wonders for folks who aren't good at personal face-to-face selling. Let others sell your solution to your target audience.

Mail these DVDs with a 1-2 page sales letter to folks in other cities (Let me know if you need help with the sales letter too - I've written a few that have done well). And follow up by phone after 3-5 days. And then follow up again.

As others have recommended, tradeshows and conferences are very good to get your foot in and raise awareness too.

[rgrieselhuber]

One other thought on pricing. I'm in a similar situation (niche market, expensive software, big clients that take a long time to sign). This can drain you and so you want to do everything you can to get cash coming in quickly.

Rather than just charging $20K in one fell swoop, can you turn it into a web application, and charge $1-1.5K a month for it? It depends on which number you'll have a hard time getting approval for, but it may be easier, especially if you give them the option to cancel any time, or at least within 60 days, etc.

[anamax]

> I have never signed any paperwork, I have simply built what they wanted and been paid.

You really need to talk with a competent attorney. And no, asking other folks what they did doesn't count because you don't know what differences between their situation and yours matter and how. Heck - you're not likely to see the differences. Besides, there's no guarantee that they got it right.

There's a chance that you don't own what you've written. There's another chance that any of your customers could give it away. And so on.

HN is not the place to deal with legal issues. We don't know the right questions or what the answers mean. We don't know what's possible. And so on.

[njl]

My partner and I built a product, and we're currently selling to higher ed. He's been selling to higher ed for seven or eight years now, and I've been peripherally involved in selling to higher ed for four or five. I'd love a chance to chat about it, and my email is in my profile.

Without knowing more details, your price feels reasonable. You need to put together a solid, total package, and don't forget 18%/year in maintenance. If your clients are getting funding from an outside source on this, you need to grease the skids. There are people who do nothing but set up and administer grants. If you can hook up with one of them, you're golden.

The best way to learn to sell is to do it. Try to find yourself a mentor you can talk to about it, and just go for it. If you can learn how to effectively cold call, you can rule the world.

There are lots of crappy sales books, but there are many good ones. I like SPIN Selling by Rackham; it's researched, reasonable, and most other solution selling books that came out afterward just repackage Rackham's results. I like Jeffrey Gitomer's Little Red Book of Selling. It's mostly about maintaining a positive attitude while people are telling you no. This is necessary, because selling is a goddamn emotional roller coaster. Watch out for books aimed at the hard sell. You can't hard sell a university.

Good luck!

[sachinag]

This is a consultative sale. Also, in academia, you're going to have very long sales cycles.

If I were you, I'd try to find a half-time independent sales rep and I'd have one hell of a website. There's absolutely no way that cold-calling is going to work the way that you think it is; it will take up too much of your time to do it correctly. (Honestly, my first recommendation is to stay the hell away from healthcare and education sectors, but looks like that ship has sailed.)

[bhousel]

Agree with all points on consultative sales..

I'd like to also suggest to do some research into what kinds of conferences your clients go to. If it is a niche industry, there are probably one or two of these a year. You (and your sales rep, if you can find a good one) should absolutely go to these. Visit the trade booths, go to the happy hours, talk to everyone. If you can afford it, you should have your own professional looking booth.

Conferences are where potential clients will go to make a decision to buy, and it can often have more to do with your personal skills than your technology. Find out who has the budget or grant money and focus on them - don't spend too much time talking to people who aren't decision makers or who aren't in a position to buy - but don't blow them off either, because word of mouth is very important in consultative sales, and they may one day be potential clients, or they may refer you to someone that they know who is looking to buy.

Good luck!

[jaddison]

Reseller and/or affiliate networks come to mind - let them do the selling for you, for a commission.

This would be easier to accomplish with traditional desktop-type software than a packaged web-app - but I would argue that it's not impossible.

You might consider resellers that are willing to work with a pay-per-lead, which likely would work in your favor (protecting your web-app source) more so than a pay-per-sale model. That way, the resellers send interested parties (leads) your way, but you close the deal - and no one gets your product without your say-so.

The normal "protect-your-source" issues arise, but those are out of the confines of this discussion, I think.

[grandalf]

I'd suggest just making a list of 10 potential clients... then research the organizations a bit and contact them and ask for a few minutes to present what you've done.

The key is to realize what you are selling. In the first 30 seconds of a phone conversation you're selling them on the idea that you are professional and that they should actually not hang up the phone...

The next step is to mention your product and to get them talking about their needs. Ideally they tell you a bunch of needs that your product perfectly addresses.

From there, you have to worry about logistics, such as who is actually going to make the purchase decision, etc. You should be prepared to work with their organization and process and to do as many phone calls and online demos as needed to get everyone comfortable with the product. Also realize that their purchase timeframe might not be immediate.

The main skill that professional salespeople have is the ability to efficiently get people to commit to a purchase. One develops a sixth sense for when to ask for the signed contract, etc. But with any new product, even a seasoned salesperson is going to have to do some learning about the typical customer, the product, etc.

I think the best thing to do is just ask "so what's the best way for us to proceed?" to your most trusted contact in the organization, and let them tell you how to sell to them.

If it's a high priced product, be prepared to have an in-person meeting before someone will write you a big check. Once you have signed a few clients then it may be possible to sign people over the phone.

The hardest sales are the first few, but it sounds like you already have some happy clients, so you should probably contact them and ask if they might feel comfortable talking to your potential future clients about the product, etc.

Also, be prepared that some may say "hey, we paid you to develop this and now you're selling our product to others?". You might want to offer them something in return (such as free upgrades) and discuss this with them up front to avoid any confusion, etc.

[edw519]

I believe in keeping things simple. This project sounds like your pride and joy; you've put a lot of yourself into something that solves someone else's problem quite well.

Talk to them, understand their problem, and then show them how your software solves their problem. Remember, it's all about them, not you. That's it. There are a lot of other details, but they are just that: details.

Focus on solving your customer's problem with your offering. Be yourself, care, and let the journey take you to their solution.

[consultant]

Thanks, you are correct. I really have put a good amount of time into this niche and truly enjoy it, to the point where I just decided to drop a client so that I could give this my full attention.

What you describe is how it worked for my first set of customers. I solved the needs of the first person, and then for each subsequent customer, I was introduced by the previous one, met with them, and had a 'be myself' approach. There has never been any paperwork beyond a simple text file describing the work that will be done, and no one has ever signed a piece of paper. I just showed what I did for the previous guy and I believe they liked the fact that I wasn't really pushing a product, I just knew how to develop something that solved a problem for them. I am very comfortable with this approach and perhaps I shouldn't change it.

However, pretty soon I will have exhausted the potential clients in my local area since it's not a huge niche. My thoughts were that some other organizations might have different attitudes towards forking over a lot of money to one guy in blue jeans, and that maybe I would benefit from actually "learning" sales. This thought came from watching this particular interview:

http://mixergy.com/maponics-darrin-clement/

He focuses on a mapping niche, and describes how he was able to expand and sell more expensive software by actually taking formal sales classes.

I really would prefer not to do this and would prefer to just say "check out what I did for these other folks", but then again I'm willing to do what it takes.

[wavesplash]

1) You price the product based on what the market will bear. If you say "it costs $50k" and they say, "great where do we sign?" you're probably selling too cheap. You need a few 'no's to tell where the top of the pricing range is.

How to guess the initial price? Ask your existing clients how much they'd pay for an off the shelf product.

2) Read up on Enterprise Sales - you're basically doing a small version of that. Academics and Unis are notorious for long sales cycles (years).

Good luck!

[NoBSWebDesign]

I am in a very similar situation as you are. We have a very niche product that we sell to higher-ed. We sell it as a subscription model, which we allow them to pay X years upfront with a contract so that it more closely resembles a fixed-cost product to better fit their budgets.

As far as cold-calling goes, it really isn't worth it in this industry. The low conversion combined with the insanely long sales cycles just isn't right for a cold-call approach. That said, we've modified the cold-call approach by setting up Google Alerts for phrases which indicate a university that is ripe with need for our product, and then send them direct product information tailored to their specific needs.

We've also developed some internal software that helps automate this process. It has worked very well for us so far.

I would be very interested in talking with you further, as it seems we share a common market with common obstacles. Please feel free to shoot me an email.

[mahmud]

You're standing on a good industry podium, least you could do is have an email address in your profile. You never know who might be able to sell your software for you on a commission.

Don't hesitate to shoot me an email :-)

[jonah]

It sounds like you've been benefiting from referrals already. Don't give that up. Academics talk to each other you know. They also go to conferences. You might consider attending.

I do a lot of work for clients in the apparel industry and it's all been referral. I also try to go to the bit seasonal shows in Las Vegas and get my current clients to introduce me to other people they know there. Start conversations.

[tdziuba]

You don't. Accept your failure, go out and get a job.