How much should our product cost?
Until now we’ve been focusing on developing the software – we believe that a company without a superb solution is worth nothing. However, as we also have mortgages to pay, there rose the question of our product’s revenue stream. And hence the problem – what would be the revenue model of Plumbr and how much should it cost?
Any product’s price should reflect its perceived value and be competitive. Plumbr is no different here, and its price should be related to the severity of problems it solves or helps avoid. Let’s discuss the value of the product and possible licensing models in more detail, so that we could ask in the end – how much should we charge for our product?
The value of Plumbr
We asked a fellow marketroid to phrase their opinion on what the value of Plumbr is. And we like the result:
First of all, Plumbr allows your customers to eliminate their Java apps’ availability problems caused by memory leaks. By having Plumbr report problems well before these affect production application, your customer avoids negative business impact caused by a slow or non responsive application. Secondly, Plumbr helps minimize the time it takes to solve a Java OutOfMemory problem. Your customer wins from not wasting their top developers’ and Ops’ time on hunting down and solving the leak, and on holding the production app’s hand during the whole process.
For us, it seems that the latter is actually easier to put in numbers. An OutOfMemoryError always catches you unprepared. Since we have to generalize, we’d estimate that a memory leak in a decently sized enterprise application with moderate rules for security etc (see our Solving OutOfMemoryError blog post series for reference) takes around 3 man weeks to solve. This includes the Op’s and developer’s collective time for hunting and solving the leak, some QA time for regression testing, and some management time for communication and release coordination. Of course, the actual costs vary in a very large scale, but this is what we currently can estimate based upon our team prior experience.
Let’s say, in a decently sized environment (with some 10-50 people developing and managing the application) OutOfMemoryErrors occur on average twice a year. Above-the-average guys who get to solve the leaks probably represents around $10k of costs per month (again, as good estimation as any other, this number is taken from Fred Vilson’s recent blog post. With these estimations we come to the conclusion that avoiding the memory leaks is worth $15k per year (two times the three week troubleshooting sessions within a year for a guy with the cost base of $10,000 a month).
Now, we should add to that the loss of revenue (profit) that any SLA problem bears. Until you solve the leak, restarting the JVM is inevitable, and this often means loss of sessions and/or service downtime. However, the differences among different businesses in this regard are far too big for us to dare to generalize. If the customer directly earns money with the Java application (eg. runs a web shop) then the losses might be huge. If the application is in a business supporting role (eg. a corporate web), the losses are probably smaller. But they still exist.
We also tried to compare ourselves with the alternatives on the market, but immediately ran into problems. First of all, differentiation-wise, there are no alternatives available that would both 1) monitor for memory leaks in real time and proactively report when something fishy is found, and 2) minimize the time it takes to solve the leak by reporting which objects leak, and the line in the source code where the leak originates from.
We have a bunch of less direct competitors though, and can divide them into three categories:
- Profilers (Yourkit, JProbe, VisualVM)
- Heap analyzers (jhat, Eclipse MAT, Yourkit)
- Application Performance Management tools (AppDynamics, Dynatrace, CA Application Performance Management tools)
We have separate blog posts coming up where we compare Plumbr in all those categories. What is common to all of them, is that they need more expertise to use (which takes time and money to grow or buy) and they require more time for analyzing the reports to uncover the source of the leak.
After uncovering these excuses we decided to omit competitor pricing analysis from our revenue model calculations. But maybe we are heading to the wrong direction here?
As seems to be a rule nowadays, we also believe that the most effective way to bill for Plumbr would be using a renewable periodic license. We are thinking of billing on a yearly or 6 months’ basis, per JVM. The license holder would receive all upgrades during the license validity period without additional cost.
Another possible source of revenue might be charging for every leak report generated using Plumbr evaluation license. This function is being offered for free at the moment, and we don’t see it as the main source of revenue (but feel free to convince us in the opposite).
Also, the value of Plumbr is very different in pre-production and production environments. Since Plumbr is able to warn of the approaching problems and makes it possible to avert them entirely, it is most effectively used in production. Of course, we shouldn’t forbid using it in pre-production environments as well, but since it’s usually very hard to uncover memory leaks in environments with artificial application usage, we’d price such usage cheaper than running Plumbr in production.
One more thing – we want to support the academic community, and offer Plumbr for free to them. The reason being that we still vividly remember how good it felt to
workhack with bleeding edge technology as a student, and how big a barrier was even a small price tag on any software package. But take this a side note, that should not divert you from the general topic of how much Plumbr is worth.
We are asking for your help!
The aim of this blog post is to ask your input on our thoughts. Tell us your opinion:
- How do you perceive Plumbr’s value, does it align with the quote from the marketroid above or would you add or remove something?
- What would be the justified price of Plumbr per JVM for a yearly subscription for:
- Pre-production use
- Production use
- Are we on the right track with the pricensing model in general? Would it match your expectations?
Leave your thoughts in the comment box below. We thank in advance for your contribution!