I understand that can be interpreted this way. Thing is not having to pay for a subscription leave more money to spend on development. What I do is if for contract I develop code that I can reuse in other projects, I will not charge the customer for that, only for what is specific to him. And on these parts I will be the owner and have right to reuse it elsewhere.
We should move this into another thread... But this is at the core of problem with hourly billing. Car engineer does a ton of R&D to figure out how to best build the seats in a car. They will use those seat configurations in every model of every car ( tens of thousands ). Do they charge you for it? Do you expect a discount because they aren't coming up with something new? Of course not, you are paying for the value of what they provide, not how long it took them to throw the seat configuration in the in the design, or even in YOUR car.
At it's core, coming up with templates, design patterns, add-ons, is a source of conflict between the developer and the client. In fact, on that model, even buying a faster computer is not in the best interest of the developer. However, if you sell the software based on a value the client is happy with, and provides you a satisfying profit, and you deliver the expected goal, it's a win-win.
This problem is part of the race to zero ( zero fee ), and this ever growing conflict of interest between the developer and client. Now, if you take hourly billing out of the equation, the relationship becomes easier. The money covers your needs, and their needs. You also have incentive to complete the project as quickly as possible, but also as high quality as possible, because you don't want to spend time on bugs that shouldn't be there. The client is happy, because the cost is not a risk, because it's set, and within the bounds of the value they see in the project, and has no concern about the project because they trust you, and you are delivering on their goal ( and the goal is not "to rebuild this database" ). They know, 'I paid $n, and received the delivered goal and that value matches what I paid, or even more value than I paid'.
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well.. if the costs of r&d (etc) won't get a break-even soon enough for a model, that specific car modell will be dropped - or never go public. There's no free lunch.. if the cost for those seats are too much, they will change it. And You won't get a pricy high quality seat in the entry-level model
If You go to the custom car builders, they will charge for that seat - because they create a seat for one project
Around here, I don't know a fm dev who sells that numbers compared to a mass-car manufactor (MS and Apple are in that category)
We (means my company) are not in the mass market, we do individual, custom solutions. We do not charge the base developement, that's our 'good', goes into the hourly rates in the sense, that some r&d is include in that base rate. We need to get something to eat at the end of the day... but 'modules' that probably go into several solutions won't be billed separately
That said, we had projects that could not be realized because of the licensing costs. Could be done with runtimes, but since those project are always 'on the flow' (customer want changes more often), we stopped that projects (always in a friendly tone, those cudtomers are not 'gone', just those projects)
Billing by the hour and billing by value are two concepts. Each can be implemented - with imperfections and caveats.
Billing by value means that the target must be identified with sufficient precision.
Then there is the issue of perceived value. Customers often talk about value but do think 'how many hours could it take this guy to do this?', which leads to underestimated values. It is difficult to convince some who has already made up his mind about how much it is worth to him.
At the end, FM is best used in-house. Doing FM-based development for small customers as a service is no longer a viable business option.
The good thing with FM is that it enables customers doing the stuff themselves. Thus they can avoid external cost and can get a precise idea of development cost.
You once named it pointedly: get better customers.
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What’s wrong with saying no to a project? If the profit margins are sufficient on other projects...this is a none issue. I’m not saying it’s easy, but listen to Jonathan’s stuff. Getting better clients will make it easier and less stressful. Finding a way to productize a service the right way gives you a way to turn down projects with super thin margins.
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All stuff Jonathan deals with. He isn’t new at this and has an approach the really works well. It takes practice, but if you are even talking about underestimating, you are doing fixed pricing, not value pricing. It’s a different mind set.
Josh - do you work for yourself? Sometimes we have to take a project even though the profit is not great - I have to pay the bills somehow.
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I often find these 'think differently' videos a little idealistic - at the coalface of trying to win contracts it's a dogfight right now. I do turn down work but at the moment my project list is getting very thin - I have to branch out.
Absolutely, you do what you gotta do. Although it never hurts to step out of one’s paradigm and see other ways to look at the challenges 
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Now you're talking about your own profit; and yes sometimes we just have to worry about cash flow more than profitability. But keeping in mind that committing to one project may prevent you from working on another. Opportunity Cost and all that.
But a project where the FM licensing cost would be the thing that drives the customer away would typically be a project that I would not want to take. If $900 is a stumbling block then that typically means there is not a large enough budget to do any decent kind of development. That's from the perspective of a custom dev project. A vertical market product may be different but that's not what I'm after.
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Yes - but we got some projects that started small, really small. A couple of years later, those customers got more licenses, FMS, new modules... just because they were really happy with that 'starter' project.
Sometimes, even hardware has to be put in that project. If a customers has a limit of -say- 10k but needs 2 Macs and maybe a mobile device.. that 3.4K for a 5 users license counts (no, some people will buy, not rent..)
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That a choice on principles that is entirely on their account and they must know that it comes at a cost. If they both put out a fixed budget and set of principles like that, then I'm out of the door because it is not reasonable. There is cost to the principle and they should be able to absorb that cost; you cannot have your cake and eat it too.
I don't fault them for the principle as such; but the combination of a too-low budget and a high principle is a huge red flag for me.
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I agree with both @WimDecorte and @Cecile. There are definitely times when you have to do what you have to do to pay the bills. I completely understand that and not saying that is the truth of the matter at times.
It’s also very common for us to work so much on the implementation, that we don’t leave enough time to work on the business. However, the principles Jonathan talks about may greatly help you. It’s not an idealistic approach, they are principles that help to focus on how to gradually improve your business.
I have worked as an in-house developer, as a consultant, as a contractor, as a business owner. I’m not at all telling you to abandon what pays the bills. However, this is one really great discussion point. If you double your rates...and you lose half your customers... is that all bad?
I wish I could double my rates and turn away 50% of my customers but the reality is that in the U.K. FileMaker just doesn’t have the presence as it does in the US. I have to do sales, admin, taxes and reporting, analysis, specs, development, deployment and support.
I’m tired of the fight to be honest - I’ve been in the IT industry in various roles since 1990 and it’s always been a constant battle to keep current, move with the times.
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Again easy to say when you are part of a large software group with the ear of FileMaker - no offence meant but it’s a different battle I’m facing. Eight of my customers are of the verge of just closing - the staff are furloughed and unlikely to come back. I am owed thousands in support contract fees.
I have to face reality - while FileMaker is not working out like I had hoped, it’s probably because I’m crap at selling being more technical minded.
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This is not America and FM isn’t a household name in Europe. It is unknown to must businesses here.
Selling a platform nobody knows isn’t easy in normal times. In recent times it has become even more challenging. Then, Claris has no love for small businesses. Then, license prices in Europe are substantially higher than in the US. Then, there is Claris’s US-centric communication style that doesn’t really catch here.
Time for exploring new ways.
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I think you're mentally blocking yourself by thinking that way.
I've had my own company for 20+ years and still do. Obviously I also have my role in the 'large software group', but I have been and still am in your shoes.
And the 'ear of filemaker' is not something you get automatically by being large; even when I was working on my own I worked extremely hard to get close to FM to make sure I had as much information as I could about its strategy and direction. Very early on I found out that this kind of 'vendor management' is just as important as managing your clients.
Even at Soliant we invest a lot of time (and thus money) in doing that, nothing comes automatic to us; we have to work at staying relevant as much as anyone else.
I got my role at Soliant because I put in the work. It's not the other way around where things are easy because we're big.
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Don't kid yourself, it is not a household name here either. Remember that I have lived and worked in 6 countries on both continents (plus a country halfway between them) so I have a pretty good perspective on it. FM isn't more widely known here in North America than it is in Europe.
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Wim, you certainly have a better view on this than I do (can’t put more than 3 countries under my belt). Once again, I fail to connect the vendor’s marketing claims to reality.
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Hi @Torsten, if this is your reality, maybe you could position yourself differently. From what you say, it does look like the Claris brand will not be bringing you business in a way that let's you surf a wave. That said, some players are using FileMaker but removing it from their message because they express their value proposition differently.
Solis Digital is one of the player doing this. They do mention Claris on their website, but I would not say that it is front and center. What they sell is not "FileMaker Solutions", it's more "business transformation" " Enterprise grade digital transformation for SMBs".