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The Best Pricing Model for non-FEM Structural Software - KootWare 5

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KootK

Structural
Oct 16, 2001
18,321
The Mission

While I'm still above grade, I intend to create a suite of pay for play, online structural engineering tools (KootWare). And I feel that a big part of making this questionable venture a success -- or at least improving the odds of a contained failure -- will be arriving at a good pricing model. Frankly, this is something that I feel that other developers have done poorly, to their detriment. As such, I'd like to solicit feedback from the hive with respect to the pricing models that I'll propose below and any possibilities for improvement.

The Basics of What You Need to Know About the Offering

1) 100% online offering. No option for a local, perpetual license version.

2) The goal here is not to get rich. The goal is to extract enough income from this that I can justify pouring a lot of effort into a project that I expect to enjoy a great deal.

3) Spit balling, if I could create enough value that I could convince 1000 SE's to part with $5/month, that would be enough. Or any other combination of numbers that gets to the same place. How many software using structural engineers do we think exist in North America anyhow? Sixteen? Eighty thousand? I really don't know.

4) Think something along the lines of TEDDS, ENERCALC, or Jabacus on steroids. I do have ideas for, in my opinion, greatly improving upon these offerings. I'd like that to be a separate conversation however. For now, make a leap of faith and just assume that it will be awesome.

5) I intend to attach some manner of structural only, online forum to the offering. While it would be a free-form space for conversation, as Eng-Tips is, it's ostensible purpose would be to provide a place for me to provide responsive help to anybody designing stuff utilizing the software. Thus making the whole thing even more fun for me. This would be offered in addition to the usual help guide and verification manuals etc <-- edit added per skeletron's comments.

Some Obvservations that I Have Regarding the Pricing Models of Others

6) For software of this type, I feel that a monthly subscription pricing scheme would not be well received. As a small outfit my self, I loathe taking on any additional "monthlys", no matter how great the ROI seems to be. I'm always afraid that I'll use it twice and forget to cancel. I doubt that I'm the only one who feels this way.

7) I also don't think that a straight "pay per use" model is the way to go either. Design is an iterative process and software licensing needs to reflect that. Sadly, I don't just design a shear wall once. I probably design it half a dozen times before all is said and done. And I can't be losing my shirt on pay per use while going through that process.

8) One has to assume that anything that can be abused, will be abused. This will prevent me from being quite as customer friendly as I would otherwise wish to be. My own IP halo gets a little dirty from time to time so no judgement here.

Pricing Model A

This is my favorite of the two and would appeal to me as a customer. Keep in mind than none of the particular values are set in any way. It's really more about the structure at this point. That said, if anybody has thoughts on what the numbers ought to be, I'd welcome that too. I figure I'll adjust as use data starts to pile up but I'll still have to start somewhere.

1) Create an account at KootWare International and add a credit card, paypal etc.

2) Buy yourself some quantity KootWare credits. $10. $100. Whatever. Little gold doubloons in your digital purse.

3) To access the retaining wall tool for use, you pay $5. After the first run, you have the lesser of 20 additional runs or 60 days to keep using the tool on the original $5. One "run" would represent one execution of a full design with detailed output. <-- added per skeletron's comments.

4) If you want to share your account login and credits with somebody else, that's your prerogative. Share it with your coworker, a school chum in Brisbane, your aunt... retaining walls for everybody on that original $5. But, no matter who's using, it taps out after 20 runs or 60 days.

Pricing Model B

1) Create an account at KootWare International and add a credit card, paypal etc.

2) Buy yourself some quantity KootWare credits. $10. $100. Whatever.

3) You can use any tool your like, for free, but you can't get a detailed printout for your calcs until some money has changed hands. The software would tell you the basics of what passed and what failed and would allow you to save your file to the system for future retrieval. I kind of like this in that it would allow one to essentially do their preliminary design work for free. I could allow folks to printout their inputs in case they were worried about my going bankrupt before they get to IFC.

4) When you've got all your design settled and ready for final calc documentation, it's $5 per print. The trouble with this is, I couldn't let the user see the detailed printout ahead of paying for it. Otherwise, I'll wind up with a bunch of folks just doing screen capture etc.







 
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Here are my observations and opinions:

1. Without seeing what the printouts would be, I would be very hesitant to pay $5 per printout without seeing it first...actually for that price, I would probably try it once. So, there is probably a threshold between "taking a chance" and "not a chance."
2. The idea of the open help forum is a good one. I would speculate that you would be better off creating a comprehensive troubleshooting guide.
3. What is classified as a "run"? Thinking about Profis or even a spreadsheet (which automatically calculates as you change a number), is a run classified as a single change or is the run classified as a calculate button that is pressed.
4. The #1 thing for me running any software on the spectrum is a graphical depiction. The more accurate and to-scale it is, the better. However, I think there is a quick threshold drop-off when the graphic becomes the only thing attractive about the software.
5. The credits version is clever and definitely a way for users to spend more without knowing it, but also realize how to be efficient in their spending. I don't think subscriptions get the user to make this insight on their own.
6. Pricing Model A works once a user is familiar. Pricing Model B introduces the user to the concept. There's a way to marry the two.
7. There is one software company that actually calculates the "design time" in minutes so that if you run a quick design in under 5 minutes (for example) it doesn't count toward your total. My issue is that a timed mechanism feels like SE's going to a casino and seeing how much they can extract before having to leave or pay. I like the idea of Jabacus as a quick preliminary check but not as my final design. I think you have offered the beginnings of this option.
 
I would rather pay $50 per month than $5 per print, or $5 for 20 runs of the spreadsheet.

I have come across a similar tools - called "skyciv" it appears the guy running it is trying to expand it.

love the idea of a web portal only. make it like netflix - you can share the account with all your friends around the world - but there are levels of access ie. basic subsription only 1 open portal at a time, next level, 3 etc.

if you are lucky you may land a whale and get a 100-500 person subscription.

you could probably get rich even if the software was a one trick pony - that you could refine/optimize steel moment frames with reduced beam sections as per the AISC manual - Ive spent days mucking around with amateur in house spreadsheets for that purpose. you could probably charge $50/month, and sign up hundreds of engineering companies, especially the small ones that dabble in single family homes.

 
@Skeletron & NorthCivil: thanks for the input.

Skeletron said:
The idea of the open help forum is a good one. I would speculate that you would be better off creating a comprehensive troubleshooting guide.

My intent would be to do both. Verification, trouble shooting guide, and the live chat kind of thing. My hope with the forum is that I could make myself part of the service. Something akin to what rapt does with his software package. You get they toys and the developer to help you use them.

skeletron said:
What is classified as a "run"?

A run would be effectively one print of the final, detailed solution. You muck with the input all you like but a run wouldn't occur until you push "calculate" or whatever. At present, I'm not envisioning something where the output is updated in real time along with input adjustments. This is the feature set part of it that I don't want to delve into here but I want to create something that is a blend of power and simplicity, meant to be used creatively by folks that know what their doing. I want to stay away from dummy proof black box things that attempt to do too much and wind up doing it not well enough in my opinion. As just one example, I'd like there to be a place where users can define their own databases of load combinations and then apply those within the various design tools as they see fit. I'd also like some tools to generate project specific nonographs rather than piecemeal designs.

Skeletron said:
The #1 thing for me running any software on the spectrum is a graphical depiction. The more accurate and to-scale it is, the better

I expect to head in the other direction, at least initially. A good sketch to pair up with the numeric output is where I see my sweet spot in terms of effort & utility. I won't be getting into complex steel connections or anything where accurate visual modelling is important.

skeltron said:
The credits version is clever and definitely a way for users to spend more without knowing it, but also realize how to be efficient in their spending. I don't think subscriptions get the user to make this insight on their own.

I agree and this really is the crux of the model other than my intense desire to avoid a monthly subscription. I think that, often, the ROI really is there for these tools but the subscription model keeps people from "feeling it". The last thing in the world that I'd want is to find folks here bitching about my predatory pricing practices etc. I want users to be drawn to the system rather than pushed towards it. I want someone to run a tool and say to themselves "That would have taken me 90 min by hand. Instead, it's taken me 20 min and a $5 investment. Yay KootWare."

skeletron said:
Pricing Model A works once a user is familiar. Pricing Model B introduces the user to the concept. There's a way to marry the two

I've been envisioning that, at any point, there will be a substantial subset of teaser tools that are free and would allow users to get a feel for how things work. One option would be to have some common things always free. And I'd actually considered NC's moment frame idea as a prime candidate for this. Another option I'd considered is having a random set of tools be free in any given month. I'm worried that this would create that casino feel that you mentioned. Probably better just to feebie a handful of tools with lots of mass appeal.



 
NorthCivil said:
I would rather pay $50 per month than $5 per print, or $5 for 20 runs of the spreadsheet.

Noted but, as I mentioned in the OP, monthly subscription is pretty much the one alternative that I'm not willing to consider. I'd be willing too consider a monthly max bill of $50 if I could think of a way to keep that from being abused. I don't want the entire world sharing one account for $50/month etc.

NC said:
hat you could refine/optimize steel moment frames with reduced beam sections as per the AISC manual - Ive spent days mucking around with amateur in house spreadsheets for that purpose.

Got it, thanks. On the list of future tools.

 
RISA is a subscription model which I intentionally plan to stay away from. Additionally, it's an entirely different different product (full FEM) than I'd be targeting.

 
Not a SE. Maybe this thought is universal in engineering:

How do you show that the result is valid? Do your users have to run a dozen dummy models to compare against hand-calcs of their own before the results can be accepted. I mean, "cha-ching" for you if they do. In my industry, and I expect it's the same in structural, often times you don't have to show around your calculations, but you do want them to be reliable enough that if s**t hits the fan you can explain yourself without going red in the face.
Granted, it would be hilarious to hear a SE stand up in court say "I dunno why it fell down, I just ran a calculation on KOOK's website".


No one believes the theory except the one who developed it. Everyone believes the experiment except the one who ran it.
STF
 
I don't think B is a good model at all. It leaves you open to people using you for preliminary design and then running confirmation calcs on their own for record keeping if necessary. The problem is that:

1) A lot of people don't care that much about good record keeping

2) confirmation calcs aren't actually a large portion of the time needed to do a design. Once you've got an answer, you an fire out some calcs pretty easily to confirm. Quick iteration is where you save effort. So you'd have people using it for free. I would likely do this if I ran across a tool with that model.

Honestly, for an online system I'd prefer a subscription model. It makes sense for the medium and the workflow that you'd see. Maybe just have some basic pricing options. A more expensive rate per module and a discounted rate for all the modules or certain combinations. Then a similar set of discounts for 30 day, 90 day, 12 month subscriptions. It's straightforward and easily understood. Just make sure that output and input can be downloaded as pdfs for record keeping. You're going to scare people away with weird or complicated pricing models. Subscription models also work well to free trials.
 
personally not a fan of either option the semi "a la carte" style of model A inadvertently comes off as nickle and dimeing and the hostage printing of model B takes me back to the shareware days of the 90's when you'd get those CD's that had 100's of programs on them where just when they got interesting they would ask for your, for my age bracket your parents, credit card.

The Kootware credits idea is also a turn off. If it's just straight money credit it's almost like putting money in escrow which from a business side I'd much rather that money be sitting in my account then in your services account. I've also never been a fan of the artificial currency systems they usually just add a layer of confusion and act to have people pump more of their real money into the system. Would much rather just pay for each use.

If they do work though I could see running into cash flow problems when the server bill comes due. Depending on where you host this thing you may find the costs end up being variable, I know Amazon's system has a variable rate based on number of active processes, number of databases, and general storage quantity.

Edit:

Maybe a per project annual model where we pay a flat price for a database and then a la carte pricing for each of the modules. Modules could be pro-rated if added latter in the year. Could still see this landing you in hot water on the server bill though, which I'd guess is why a lot of the players out there are doing monthly subs.

Edit2:
on the Kootware credits if instead of a pay per credit thing if they were an earned reward system for users who have been exceptionally helpful in the forums, like the star system here, provide beta testing services, or perhaps have just been loyal customers for awhile (loyalty bonuses used to be a thing). I could get behind something like that.


Open Source Structural Applications:
 
For me to formulate an opinion on what/how I would prefer paying for a service such as you are envisioning, I need to have an idea of what the actual structural tools are. Realizing this would be an ongoing enterprise where you add or improve it over time, the initial "kick-off" will probably be the main thing that signals everyone's response in terms of money.

If I see a lot of really good tools (say 15) that I would rarely use because of my business mix, but also see 3 or 4 things I would use, then my desired payment method is more along the pay as you go model.

On the other hand, if I see 18 tools that I would most likely use a lot due to my business mix, I am more for the "buying in bulk" method.

Also, while I love graphics, I am more concerned first with the "answer" itself and then I want a nice output graphic secondarily. I would not mind not having graphics as long as I can decipher the answer. I am assuming you are writing software that tackles some of the more difficult items that not all engineers may be well-versed in.

I bought a "package of tools" once for about $1,000. Of the package, there were only 3 tools I really needed and used a lot. The other 10 I rarely use. The foundation program I was really interested in sounded good until I used it for real, not the trial version. Turns out, it only does vertical loads down, no uplift loads. I was buying it to speed up PEMB foundation designs. Well, no real use there since about all metal buildings have uplift and in my area, uplift generally controls the design in several aspects. That experience shaped my thoughts on paying. With your proposed system, I would not have to worry about not being able to try it out. Once I see the actual program, where I can use it in my business etc, then I would have a better idea of how much I am willing to come off the hip for.
 
If I pay for something, I want to at least 'feel' like its 'mine' to use as I see fit. If I got used to your tools, and am using them under typical time crunch pressure, if the # of calcs/runs becomes another added consideration/complication in my workflow, I just don't see myself keeping it as a regular part of said workflow.

That said, I'm in a 2-man shop, and I'd be very near the front of the line to give whatever you come out with a shot.

Edit: After reading Celt83's edit about 'per project' fees...that thought crossed my mind as something I'd be willing to pay for, just to pay a flat fee to be able to iterate as many times as I want. I'm not sure how to stop that from being taken advantage of though, by people running multiple projects through a single 'project fee'...
 
A few general comments before I start responding to the specific comments of others (Thanks for everyone's help).

1) I'm glad that I came here to ask this. I really thought that I had a home run with my pricing model and that appears to not be the case.

2) I get that some folks will always prefer the monthly subscription or full, perpetual ownership but that won't ever be the path for me. I feel that I'm able to read the tea leaves on this part of it fairly well and, for tools of the type I mean to develop, I think that a monthly subscription model would just see KootWare on the scrap heap of other vendors who've tried this.

3) An interesting case in point for me has been that of a software vendor by the name of Napior. A couple of guys in Seattle who had some slick modules for wind, snow, EQ and some other stuff. It was really well done and I signed up thinking that, at $20/mo this couldn't possibly NOT have good ROI. Six months later, I'd paid $120 and only used the tool twice. And I was mad at myself for a) the waste and b) the fact that I now had to go to the trouble of unsubscribing. And all this, despite the tool being excellent. I vowed, in the future, to be very discriminating about the kind of subscription services that I signed up for. As far as I can tell, Napior no longer exists.

I'm a small business owner and expect most of my customers to be small to mid-sized outfits. While it seems as though any one $20/month thing is of no consequence, it's surprisingly easy for me to get to the point where all of my subscriptions added together sort of ARE. Risa + Basecamp + Dropbox + Eriksson Precast + Autocad + Revit + Quickbooks + Bluebeam + Office 365 + Godaddy + E&O Insurance + General Liability Insurance. You get the idea. And this is just the stuff that I quite literally cannot do without.

HELP! I'd like your help with a thread that I was forced to move to the business issues section where it will surely be seen by next to nobody that matters to me:
 
My thoughts so far

1. There is a software out there that charges by the number of users active at the same time. My office doesn't use it much but occasionally things come up and a couple people will jump into it at the same time unknowingly and 6 months later we get an enormous bill. That company's business practices and that style of cost structure has left a very sour taste for me. I would much rather something have a dead simple pricing scheme.

2. The "a la carte" type of structure could encourage users to come to the platform that might require more support. Say an architect that just needs a header size. Maybe this is something that you want to encourage maybe it's not. Either way, worth considering.

3. I think at least in the beginning to gain credibility, there would need to be a somewhat free module. Something common with Enercalc or similar that can be compared easily.

I'll have more thoughts later.
 
Sparweb said:
How do you show that the result is valid? Do your users have to run a dozen dummy models to compare against hand-calcs of their own before the results can be accepted.

I really haven't gotten that far yet. Some ideas:

- There would be verification examples.
- There would be a user's manual.
- If someone is serous about using a tool, spending $5 to run twenty designs against verification models doesn't seem unreasonable.
- If someone expresses an interest and contacts me about it, I'd be happy to give away a free 20 runs / 30 days on a module.
- If someone expresses an interest and contacts me about it, I'd be happy to run some verification models for them if they wished.


HELP! I'd like your help with a thread that I was forced to move to the business issues section where it will surely be seen by next to nobody that matters to me:
 
For me, the number one thing would be a print out showing inputs, detailed calculation, and outputs, with a sketch (no scale needed), with lots of description and reference to code clauses. Basically just like the Mathcad sheets I use.
 
TLHS said:
I don't think B is a good model at all. It leaves you open to people using you for preliminary design and then running confirmation calcs on their own for record keeping if necessary.

Noted and thank you.

TLHS said:
2) confirmation calcs aren't actually a large portion of the time needed to do a design. Once you've got an answer, you an fire out some calcs pretty easily to confirm. Quick iteration is where you save effort. So you'd have people using it for free. I would likely do this if I ran across a tool with that model.

I'm going to push back on this a bit. I agree, a designer spends most of their time in the iterative portion. But as long as I'm getting $5 (or $3 or $1.. or whatever) per design I don't know that I care. I see spending however long arriving at your final answer and then having two choices:

1) I can pay this KootK dude, for whom I now have a modicum of loyalty, $5 and I'm don with this or;

2) You fire off some calcs of your own, as you suggested. But, really, what could you expect to fire off on your own that would be worth lest than $5 of your time?

When I think of it this way, I appeals to me greatly. As long as I get my $5, I'd be honored to be the dude that provides your with a great, free preliminary design tool.

HELP! I'd like your help with a thread that I was forced to move to the business issues section where it will surely be seen by next to nobody that matters to me:
 
Another general comment:

I've done some reading on what makes video games addictive. Much of it comes down to there being a very short cycle between investment and reward. That's just how human brains are wired. We're like smart-ish chickens. So I'm really wanting the experience to be like this:

1) Hmm... this tool looks like it might work for me.
2) The outlay is a measly $5 with no ongoing commitment. What am I really risking here? I'll try it.
3) Wow, that tool I spent $5 on must have saved me 45 minutes of effort.
4) KootWare has earned a little good will from me and I'll consider trying it again in the future.

That it. I've positioned the ROI as close to the initial investment as I can. No waiting a month or six to figure out if the cost benefit pans out. Like the crystal methamphetamine of structural software.


HELP! I'd like your help with a thread that I was forced to move to the business issues section where it will surely be seen by next to nobody that matters to me:
 
Celt said:
inadvertently comes off as nickle and dimeing and the hostage printing of model B

This is kind of a double edge sword I think. Yes I'm nickel and diming you. But then I'm only charging you nickels and dimes. It's not as though you paid me $50 for a month initially and then I was gouging you for a bunch of little extras. It would only ever be the little extras in the amount that you thought valuable enough to pay for. To an extent, I really do think this will require a bit of a change of mindset for users who are used to other things. And perhaps that's unacceptably dangerous.

Celt said:
The Kootware credits idea is also a turn off. If it's just straight money credit it's almost like putting money in escrow

I don't think that this will be a big deal. Firstly, it can always just be pay as you go if preferred. Nothing in escrow. Secondly, the amount could be as ridiculously small as desired. $5. $20. The only reason to even have a credit system is that I'm imagining a manager signing up to use it for a small office. Maybe they want to buy $50 worth of credit and then let their team go nuts with it, knowing that's it's capped at $50

Celt said:
If they do work though I could see running into cash flow problems when the server bill comes due.

I'd not given this much though. I will now though thanks to you.

HELP! I'd like your help with a thread that I was forced to move to the business issues section where it will surely be seen by next to nobody that matters to me:
 
If your talking $5 drops...maybe something like Digital Oceans Droplet model would be interesting kind of a roll your own design tool set.

I think there is opportunity to break the mold on the pricing structures being utilized.

KootK said:
will require a bit of a change of mindset for users who are used to other things.
It is important to point out this will be the biggest hurdle we are all creatures of habit and the full online model is hard for your average person to grasp since they don't get anything other than what they see in their browser so that immediately kind of cheapens the product for some people.

Open Source Structural Applications:
 
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