Questions

How to determine if software licensing is profitable or feasible? Suggestions on how to prospect for leads?

I am building a reporting platform that is integrated with automated infographic generation. We are exploring the possibility of integrating with existing software or platforms and system to help improve their reporting display for user. However, I am unfamiliar with licensing model and need help to find potential prospects and conduct sales analysis & forecasting.

3answers

I mentor startups on the application of product management processes to help them make better decisions.

Before you try to do sales analysis and forecasting, you need to find out if your potential licensees see value in using your solution. The best way to do this is to talk to some of their product managers and find out what challenges they face. Are they struggling to differentiate with their competitors? Are they getting lots of complaints or requests for improved visualizations in their product?

Once you understand their situation as they view it, you can explore to see if your solution is valuable to them by solving one of their big problems. At the point where you understand the value to your potential licensees, you can start to test pricing.

Let me know if you need more help here. Cheers and good luck.


Answered 7 years ago

Willis & Shawn answer your question as you've asked it. I'm going to suggest a slightly different tack. Don't think about licensing at all, and don't spend any significant effort on attempting to sell licensing deals.

Instead, focus on building your product to a point where it's so great that people in your industry (including potential licensees) start sharing it with others. Product excellence will generate all the inbound leads you can handle.

Conversely, you could be the best salesperson in the world, and if your product isn't excellent or doesn't look too complex to replicate, then the likelihood of you generating sufficient momentum and motivation for someone internal to recommend that they license your product is pretty low.

I can only think of four reasons you'd be thinking about licensing right-now, and only one of them is a good reason:

1) The good one: You've got so much traction with your product and you've achieved the max of what you can do without raising more, and you'd rather license than build further.

2) The bad investor: Some investor has told you that (s)he thinks that licensing is the way to go or is crucial to their investment and has asked you to model it. If it were me, I'd walk away from that investor.

3) You don't know how to grow your business, and you think licensing will be a magic fix. It won't be.

4) You're over-thinking the business part of your startup. One of my investors who recently sold his company for a billion dollars, told me that at the startup stage, don't over-think your business. The only over-thinking energy should be in the product.

Happy to do a call with you to help you evaluate your best opportunities forward based on knowing more of the specific of your situation.


Answered 7 years ago

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