When you look at the software startups that receive venture capital investments today, many of them are software companies selling to businesses rather than private consumers, but why is that? What can make businesses better customers than private consumers when developing B2B software products?
Today’s blog will answer that question and also show you some things to consider when selling B2B. In case you’d rather watch a video, I have made the following one on this topic:
Developing B2B Software Products – Advantages
Now, it is quite different to sell software products to companies than to private consumers. For example, companies are usually a lot less price-sensitive compared to private individuals, and they tend to buy in bulk.
Selling to businesses can also give you more freedom when it comes to pricing models. Private consumers like to buy products at a one-time price, but businesses are more willing to buy subscriptions and other pricing models. We have other blogs that cover the many benefits of that, such as providing companies a predictable and stable monthly revenue.
Alright, let’s get to the developer’s perspective. If you sell a software product to private consumers, they tend to care a lot about the user design and they usually want things to look pretty. But when selling to companies, you don’t have to spend as much time on the user design because they tend to value the functionality a lot more. This can free up a lot of time and enable you to develop the features you really want instead of having to design everything to perfection.
Since business customers can bring in large deals, having a couple of customers can be enough to get a decent revenue. You are then also given a lot of possibilities to tailor the software product specifically to their needs. This can pose interesting challenges that will not only make your product better and more advanced, but they can also make you a better developer!
Disadvantages
However, tailoring your product after a few customers will take time. If one churns, most of that time might have been in vain. This also indicates a strong dependence on a few customers, which is not ideal.
Because companies rely on your software product to make money, they expect your customer support to be top-notch. Private consumers might not care as much about support or uptime, for example. They might use the product just for fun!
The professional nature of business customers also means that they require your software product to be integrated with a lot of other business systems such as ERP or CRM software. Creating seamless integrations with those systems might pose a bit of a challenge.
Mitigating the Disadvantages
At the beginning of this blog, I mentioned that companies like to buy products in bulk. That is also true for software products because they want multiple employees to be able to access the product. The best way to implement that is by choosing a floating or node-locked licensing model.
Cryptolens makes it effortless to implement any licensing model in your favorite programming language! With our easy-to-use software license manager, you can implement licensing for free, within minutes.
Thank you for reading, Stay Smart!