How to Sell if Your User is not the Buyer

https://writings.founderlabs.io/p/how-to-sell-if-your-user-is-not-the

61•mooreds•2h ago

Comments

Brajeshwar•1h ago

This is how the likes of Slack, Postman sells, “Hey, 96% of your developers/team are already using it. It makes sense to buy it.”

micromacrofoot•1h ago

this happens all the time at large companies with small teams, plus if there's a security team they hate it so that's always an angle to lean on "hey 400 people are using 12 different slack workspaces, wouldn't it be nice to manage them all from one corporate account?"

mooreds•1h ago

Obligatory mention of the SSO tax: https://sso.tax/

tw04•1h ago

So how exactly are open source software stacks supposed to make money if not by withholding enterprise features from the free version?

There’s a reason they all do it, and it’s because SSO is one of the few features enterprises are almost universally willing to pay for.

thewebguyd•1h ago

The problem is there's a huge gap between "We are a small company, and don't care about SSO" and Enterprise.

The company I work for is in the middle - anything where SSO is gated behind "Enterprise" is not even considered by us. We don't need 90% of the other "features" under the Enterprise plans, and most aren't willing to custom quote us for Basic+SSO.

Withhold it from free versions, sure - but definitely don't lock SSO only behind the most expensive option.

closewith•1h ago

Locking SSO behind the Enterprise option works. Your company is an outlier that can be ignored.

thewebguyd•1h ago

I'd hardly call a business with between 150-300 employees, that cares about SSO but doesn't need the full suite of enterprise features an outlier, I'd imagine that's fairly common nowadays.

Maybe in 2015 it was an outlier, but SSO is now a non-negotiable and with many of these businesses on M365 business premium, which includes EntraID P2, SSO is now accessible to a large number of companies where it wasn't before. It's no longer some niche enterprise only functionality, it's a bare minimum for business SaaS.

tw04•1h ago

The fact you’re unwilling to even consider a product with SSO behind the enterprise license is what makes you an outlier, and frankly probably a bad customer.

And if you’re trying to negotiate custom, non standard licensing when you’ve only got 300 employees you will likely be a noisy customer in perpetuity.

No offense, that’s just how I’m betting 99% of folks read your response.

codeflo•1h ago

Companies of that size are common. It would in isolation even be profitable to serve them. The problem is if you introduce a middle tier that includes SSO, many enterprises will go for that instead of the expensive enterprise tier you want them to buy. Basically, you sacrifice medium companies as customers in order to chase after that sweet enterprise money.

thewebguyd•44m ago

That makes sense, but I still think there are other features that can be gated behind enterprise to help make sure that doesn't happen while still providing SSO for smaller companies.

You can have user limits on the non-enterprise plans (Microsoft does this, for example, with Business Premium locked at 300 users or less), or gate other features behind enterprise: Have MFA across the board, but lock conditional access behind enterprise, lock more advanced audit logs & reporting behind enterprise, lock RBAC behind enterprise, or data residency, custom security policies, API limits, etc.

There are numerous other features that are non-negotiable for enterprises to help funnel them into the enterprise plan, while still being able to service medium companies with SSO.

autoexec•51m ago

withholding enterprise features from free versions isn't the problem, the problem is charging extortionate rates for an important security feature.

> "Decouple your security features from your value-added services...If your SSO support is a 10% price hike, you’re not on this list. But these percentage increases are not maintenance costs, they’re revenue generation because you know your customers have no good options."

mooreds•40m ago

Heya, I work for a commercial auth provider but we provide a free version with unlimited SSO connections. (Details in profile if you are interested.) So I have a bias.

There's a number of ways for open source software stacks to make money, but I agree that finding features that companies with money will pay for is a great one.

I think Patio11 said it once, but SSO feels now like HTTPS felt in 2015. Used to be super expensive, but now should be "table stakes".

Other ways open source companies can make money:

- hosting (offers that sweet sweet recurring revenue)

- support (especially SLAs, which pair nicely with hosting)

- other enterprisey features, such as integrating with enterprisey tools (DataDog, SIEM tools)

- other auth features like fine grained authorization (RBAC, ABAC, PBAC) and provisioning (SCIM)

- control planes (I see this with tools like Cerbos and Permit which both offer fine grained authorization execution engines that are free, but charge for the control plane)

- certifications (SOC2, FIPS, HIPAA, PCI). this might not make sense in all cases, it does depend on the tool

- custom feature development (better if this is pulling forward planned development rather than something unplanned)

It's not easy, though.

I wrote more on my personal blog about freemium[0] and open-source[1] business models.

0: https://www.mooreds.com/wordpress/archives/3621

1: https://www.mooreds.com/wordpress/archives/3438

ralferoo•1h ago

Some of these seem iffy. Looking at one at random with a seemingly excessive increase:

Coursera: $399 per u/y -> $49875 per year [7], 12400%

So, I check out the footnote:

[7] Coursera requires a minimum of 125 users to access SSO pricing. As they do not have an Enterprise price listed, this price just scales their lower cost tier up to 125 seats.

Dividing by 125 shows the SSO pricing is $399, so exactly the same as the non-SSO pricing. I fail to see how this is an SSO tax.

It might be that there is an SSO tax as the Enterprise price wasn't available to them, but listing it as 12400% increase seems like a deliberate attempt at deception.

theamk•1h ago

looks legit to me.

I've used to work in small startup with ~10 people. The owner was always happy to pay for tools to developer productivity. We did not subscribe to Coursera, but in the theoretical case we'd all want to, the pricing would be:

10 users, no SSO: $3999/year

10 users, with SSO: $49875/year

It's an SSO tax, and a super hefty too. We'd probably balk at it and chose the less-secure option instead. And the fact that we'd get extra 116 licenses we had no need for is absolutely irrelevant, there is nothing we can do with it at all.

stronglikedan•1h ago

It why students get so much free software too.

ezekg•1h ago

I think this is also one of the hidden benefits of commercial open source and similar models: individual adoption grows corporate adoption.

apples_oranges•1h ago

Clearly, yet many open source contributors just work for free..

ezekg•1h ago

I specifically said commercial open source, which is different -- one hopefully has a business model and the other does not need/want one. Working on open source outside of a commercial context has never promised compensation, and expecting compensation for it ends in pain.

scarface_74•47m ago

Except for that whole every company that tries it ends up either not making money money on it, get Amazoned (where Amazon offers a hosted version and makes money), or ends up seeing the error of their ways and using a more restricted license and still struggles.

ezekg•22m ago

Agreed. There are better models to commercial open source that align better with business sustainability, like fair source. I was mainly referring to bottom-up adoption, not sustainability.

ta1243•5m ago

Amazon already has a relationship with your corporation, it's easy to buy their hosted elastic search

Even if the original elastic company offers it cheaper, or better, that's a massive hill to climb. Corporations don't care about costs, they care about pieces of paper, or less charitably nice dinners with the sales team.

gcatalfamo•1h ago

"If they already use it, why should I buy it?"

It sounds like a trivial question to answer, but it just exposes the level of detachment that exists between who makes the purchase decisions and its users in SME context.

takinola•1h ago

Because you want to control who uses it (offboard separated employees, onboard new employees automatically), integrate into your auth systems to make it easier for employees to access, get an SLA if something goes wrong, connect to your data auditing systems, etc, etc. Companies have a lot of needs outside of just the core functionality of a product.

kube-system•34m ago

You might want to understand the politics and business dynamics before you go too far down that route. You could just end up getting your product blocked and/or replaced with a competitor instead.

esafak•46m ago

"Don't you want them to use it more securely, and with enterprise AI features?"

jagged-chisel•44m ago

Wait - it’s not secure now? We’ll be banning it immediately!

esafak•38m ago

"No, it's more secure. We have encryption, which means intermediaries can't snoop. But don't you want to be able to monitor what data goes out?"

etc. There's a laundry list of features enterprises care about, better spelled out in the sibling post.

kube-system•31m ago

"Well we have Bob from purchasing on the phone and he says we have to put this out for a bid first. And Alice from compliance wants to know, do you have [insert esoteric certification]?"

You really have to know who you are talking to and their motivations before you know what the right sales angle is.

ecshafer•1h ago

For enterprises its not usually as simple as sell to the CTO. Some things you need that, if you are AWS or Azure, the CTO and some principle engineer are who you have to convince to move the whole 20k person org over. But for a lot of software its the Line manager or director who is calling the shots, or a division head since division A may use different software than division B.

user_7832•1h ago

This works if the users are able to use the product (in this case on their personal device maybe) first, and are part of the same organisation.

But what about cases where the user isn't directly related to the decision maker? Doubly so when it's a hard to justify purchase? (I.e. you're not selling bread or IBM machines.)

For example, say, a keyless entry fob for a car. The driver benefits immensely. The CTO of Ford may probably not even entertain a meeting ("Huh, what does he think, locks are bad or something?! What's wrong with a secure lock?")

Does anyone have any suggestions for how to approach such a situation if you developed the fob and now want to sell it?

SoftTalker•51m ago

Demonstrate that competitors are adopting fobs and try to build FOMO.

at-fates-hands•30m ago

In your scenario, you're looking at a bottom up approach. Instead of going to Ford, you start at the bottom of the food chain. Used car dealerships, auto body shops, and other places that sell/install accessories for your car.

A great example is remote starters. Same idea. Great for the user, not so much for say Ford. The first places I saw these being installed? Stereo shops would use it as a cross selling feature whenever they were selling something else to a customer. I could be wrong, but it took a few years for the manufacturers to start including remote starters as an add-on. Before then, it was all kinds of other shops selling and installing them.

But its a trench warfare type of deal. You have to get into the hands of the people who can install them, then work your way up to approaching dealerships and larger clients.

I've done this with an anti-theft device. Start small, then build your client base and use that as a springboard to get interest from larger clients.

SoftTalker•8m ago

Just be sure your product actually works. Third party/aftermarket remote starters and car alarms are (were) nortorious for causing a varity of intermittent, obscure electrical issues. Not sure if it was the devices themselves, or the installation, or both.

ignoramous•24m ago

> But what about cases where the user isn't directly related to the decision maker? Doubly so when it's a hard to justify purchase?

TFA goes:

  Leadership gives approval for purchase

If your brand doesn't sell on its own, for a top-down sales motion (tfa is about bottom-up & product-led) it is usually c-suites purchasing from friends (network) & family. Folks want to go to Harvard/Wharton/GSB for a reason.

doppelgunner•45m ago

Be a middle man, charge a percentage like tiktok per sale.

greenail•44m ago

This is a bit of a simplification of how enterprise sales works. A few extra dimensions are sometimes required. For "decision makers" their own personal view of reality may not in fact be accurate. You sometimes must vet that what they tell you (and may in fact believe) actually reflects the actual power dynamics of a big enterprise. There are extra dimensions to consider; The first is: are they in a cost center or are they generating revenue. The second is: are you trying to get new technology adopted or is this considered "standardized". The third is: who might perceive your product as a risk, or a threat to their power? These data points inform your sales strategy both in who you sell to, who you avoid, and when you might choose to engage a particular persona, when to go small and when to go big.

spauldo•17m ago

I'll tell you how not to do it.

Require me to give you my contact information just to download something. Have sales people blow up my phone and/or email and ignore polite brush-offs. Keep reaching out to me periodically with requests to have a meeting about how you product can help me.

I don't have buying power, but I do have bitching power and your product will wind up getting bad-mouthed by the whole team eventually. And when the engineer asks us for recommendations, guess what we tell him?

Lookin' at you, Veeam, AWS, and Keyence.

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