October 25, 2017
Reader questions about offering guarantees, platform specialization, and more...
Longtime reader Jeshan Babooa wrote in with four questions:
About guaranteeing rates: the project could fail for many reasons that have nothing to do with your mobile strategy. How would the guarantee work?
I recommend using different types of guarantees for different kinds of products and services. For a software development project, I typically recommend a bug free guarantee, not a money back guarantee. After months and months of development, clients don’t usually want their money back. They just want the dang thing to work.
I know you don’t like platform specialization but I still want to do it! Does that mean that I’m not a good fit for your mentoring program?
For folks who aren’t getting many leads (say, fewer than one per month), I generally recommend vertical specialization the most, horizontal specialization the least, and platform specialization somewhere in the middle. That said, exceptions abound. If you have a good reason for picking a platform specialization, I’d be open to mentoring you.
Let’s say I’m an expert in AWS Cost Control. How to value price cost savings on AWS bill? Should I bill for the first year’s projected savings or something like that?
As a general rule of thumb, I would recommend setting your fee at about 10-20% of the projected savings during the first full year that your solution is in effect. If your solution will save the client $10k per month once it’s live, I’d say set your fee in the $12-24k range (i.e., 10-20% of the first year’s savings of $120,000). With something so clearly tied to bottom line dollars, I’d err on the high side. For something less tangible, I’d skew toward the low end of the percentage range.
Let’s say I want to specialize in Postgres DB tuning and I want to target only those who have the ability to understand that they have a DB tuning problem. Could platform specialization work in this case?
How the heck would “target” people like that? It’s not like folks normally post “Having Postgres tuning problems!” on their LinkedIn profile 😉
I would generally consider specializing in a particular database a horizontal specialization. Databases are like plumbing: invisible to most people. A platform specialization would be more like specializing on Shopify or Facebook or Salesforce.
Semantics aside (horizontal vs platform), Postgres is not something that a non-technical business person (i.e., the people who control the big budgets) would normally have much exposure to.
So odds are good that if you specialized on Postgres, you’d end up selling to people who don’t have control of big budgets. This means that you’ll have to either:
- Accept lower pay
- Give your buyers a story to sell to their higher ups
Both roads are pretty tricky, but not impossible. A horizontal specialization CAN work if your timing is great (e.g., right now the hot horizontals are blockchain and machine learning) or if you have the time and inclination to become recognized as one of best in the world at your chosen technology.
Thanks for the questions JB!
Yours,
—J