opportunity cost [10/20/2006 13:17:37]
I've been thinking more and more about outsourcing.
I'm a developer, and when I look at a piece of software, I can imagine how it works, and I tend to say to myself I could do that. Or, more often, I could do that better.
So for example, with this arcade game campaign, people will sign up, and then the system will send them an email a day for seven days. So in my mind, I'm seeing a little cron job and a database like this:
fname | lname | date_started | currentday | |
| fred | tempy | fred@example.com | 2006-11-10 | 3 |
| wanda | tempy | wanda@example.com | 2006-11-12 | 1 |
And that looks easy, so of course I could do that. But handling the core of the idea and really doing the job are completely different things. What happens when an email bounces? What if they want to unsubscribe? None of these things are particularly hard, but little by little the use cases pile up, and pretty soon I'm developing a whole new product.
Now, for $239, I can buy a copy of SendStudio with full PHP source code. That seems horribly expensive to me for such a simple application. But what is my time worth? Today, I wouldn't take a programming contract for less than $50 an hour, and it would have to be a really cool project. So the question is, can I duplicate SendStudio in 5 hours? Probably not.
There's another product on the market called Infusion CRM. It's a much more powerful system than SendStudio, and it does a whole lot more (like let you run an affiliate program). It also costs a whole lot more: ($4,697 or $297 a month). Talk about sticker shock. But would it save me a hundred hours work, or six hours a month?
But my $50 figure doesn't tell the whole story, because I could be using that hour to create or improve a product for sale, or adding a feature that would get people talking about my company. That doesn't happen a lot when all I sell is a commodity. Yeah, people like the personal interaction, but it's still just hosting.
When I started my company, I couldn't afford to buy software. I tried going the open source route. I used an off the shelf, open source billing system, but it was pretty basic, and eventually I replaced it with my own tool. It works okay, and it met my needs better than the free stuff, but it also has a lot of flaws.
The control panel is a different story. There are commercial control panels out there for web hosts, and they all have more features than my little system. But the control panel is what customers interact with, so it at least has the potential to be a real differentiator. For example, it could be scriptable, for people who need to generate databases or mailboxes or subdomains on the fly. Or I could use it as a way to get new products into people's hands. Like, I could install rantelope and let everyone try it for free without having to fill out any signup forms.
But I haven't done any of those things. Why? Because I'm busy doing all the support work myself, and writing code to solve problems that other companies out there have already solved.
Not to mention writing long, rambling blog posts. I think I'll stop right here. :)