$100 Drupal Site Series: Part 6 - Business Considerations
During this series on creating a profitable business around the concept of building Drupal sites for $100 I have attempted to demonstrate that there is a viable business model here. I don’t believe it is a business that will suit everyone and nor do I believe every developer will want to work on such a project, but for some this will be an excellent opportunity. Today I will cover some of the things that I think you should consider before investing too much in this business model. Some of this is just basic business sense which isn’t specific to this project.
Dollars and Sense
Oscar Wilde once wrote “What is a cynic? A man who knows the price of everything and the value of nothing”. If you want to build this type of business, be frugal, but not a Scrooge. Generally a good developer will cost you more in salary than an average one, but the good developer will work out cheaper in the longer term. A similar thing goes for hosting, avoid Virtuozzo based VPS and look for someone offering the more expensive Xen or KVM based platforms, they are less likely to oversell capacity. At the same time keep an eye on the markets you are buying services in to ensure you are always getting the best value for money.
Recognise when you have to pay for something. Spending a little now might save you a lot in the long run.
In House vs Outsourcing
It makes sense to outsource some services, for example email. You want to focus on offering a high quality Drupal driven SaaS, having to support email too is a lot of hassle, use Google Apps for Domains or similar service.
Some things are better performed in house, such as design and themeing. There are businesses around who offer cheap PSD to Drupal theme conversion services, but these services usually cut corners which will cost you more in the longer term. Having someone in house means that they can learn from others on your team and do things the right way for your business.
Pricing
Although the theme of this series is “$100 Drupal site”, that doesn’t mean every site you sell should be $100. You need to research your target market/s and make sure you are pricing your product/s appropriately. I would seriously consider offering 3 levels of service, each level should offer more options, bandwidth and storage. Some customers will be drawn by the initial $100 price tag, but when they see the feature list, the $250 product might be more appealing. Give customers a sense of choice.
Options and Up Selling
Find opportunities to sell extras to your clients. Not everything needs to be included in the base level package. I discussed enhanced support offering in my previous post, which could provide additional revenue.
Most of the clients who sign up for this service will have no interest in paying for a custom theme and/or development, but once you have them through the door you have more chance of selling such extras to them. Find the higher traffic clients and connect with them, see if they want more. The price jump is likely to be significant, but if they can see value in it, they may pay for it.
Domain Names
Domain names is a great opportunity to generate extra revenue. By default customers should get biz-name.example.net, and charge them a fee if they want to use another domain, such as mybiz.com. Most people know that GoDaddy sells domains for around 10USD, while Melbourne IT charge around 75USD. Sign up for a reseller account with one of various domain registrars and offer customers domains directly from your service. If a customer brings their own domain charge them a fee, if they buy the domain through you advertise that you waive the setup fee, but then include it in the pricing of the domain name.
Partners
Seek out partners. If you can find a company which offers a service which is a good fit with your business, work out a deal with them. Be it bulk licensing, reseller, commissions, find something that works for both parties. Your customers can benefit from such arrangements too.
Giving Back
Previously I mentioned that you will be benefiting from the great work of the Drupal community, you should acknowledge this benefit by contributing back to the community where it is appropriate. Not only does this help build the profile of your business in the community, it can reduce your maintenance workload. For example if you have a patch which fixes a bug or adds generically useful functionality to a module, push it back up stream, so you don’t have to maintain the patch. Consider having a budget for sponsoring community events to help build good will.
Data Exports
Allow customers to export their site and go host it with someone else. This might sound counter intuitive, but if they are just a base package customer and you are hosting them, they have paid you. If they are only 2 months into 12 month service, which should be non refundable, then let them take their site, that frees up server resources. It is also the ethical thing to do, don’t make your money because people are locked into your service, they will eventually resent you for it.
Licensing
Drupal itself is licensed under the terms of the GPLv2 (or later) with some contrib modules depending on GPL compatible code. If you are contributing code back to drupal.org it must be under the terms of the GPLv2. You could choose to offer the non PHP parts of your code under CC-BY with an attribution in the footer, you could release your features under the terms of the AGPLv3. These are business decisions you must make in the context of the rest of your business.
Pay for Expert Advice
There are times when you need an expert. Get a lawyer to check your Terms of Service and any significant contracts. Use an accountant to get your financial affairs right from the start. If your servers are performing poorly and your Sys Admin can’t work it out, pay for someone who can. Sometimes it is better to pay for something than trying to learn how to do it yourself.
Share
Blog about your experiences, share the knowledge. I’m not advocating putting your entire business plan online, but discuss problems you’ve solved, code you’ve created so others can benefit from your experiences. Don’t be afraid to share, Scott Adams sums this up perfectly “Ideas are worthless. Execution is everything”. I have nothing to fear in publishing this blog series, after all it is just my ideas.
What’s Next?
This is the last substantial post in this series. I have tried to break it up into digestible chunks. Thanks for taking the time to read my posts and I welcome any comments you may have.
I plan to let things sit for a few days. Over the weekend I plan to review the comments posted and emails received as part of preparing a summary response and conclusion. Anything else I think of will get tacked onto that post.