I am building a product that’s designed to be self hosted. My business plan was to offer a cloud hosted version for B2C. Later down the line then start offering licenses to B2B companies to self host. However as a solo founder and dev I have been weighting up my options and I’m currently at cross roads which sector I should focus on at the start. This is a side gig of mine away from my full time job with the hope it would become the main. So time is a resource for me. I am now thinking of going with the B2B approach first instead of the initial b2c approach.
Here is the pro’s and cons for both.
For context the product itself is a complex front end library which plugs into websites.
B2C Pro’s - Already have a lot of interest for it. Acquiring customers will be a lot easier. - Average price $20 a month. - Higher long term value.
Cons - Very high expenses (3rd party data costs) - I have yet to build the backend. - Backend requires significant time and effort to design and architect. - High maintenance and effort required to support - Very high competition
Estimated profit margin: 50-70%
B2B Pro’s - Product is pretty much built already. - High annual contract value (low end $10,000+ and on the higher end varies significantly depending on use case and company size) - No backend or hosting required. - No 3rd party data costs as its self hosted so the hosted has to provide their own. - Low effort to maintain and develop - Very low competition. There is only one very large player in the game that basically has a monopoly in the self hosting game for this product. They offer a free version to self host and a paid version. The paid version is extremely expensive and only a very few select companies use it. The free version is used by most companies but is limited in features. The plan would be to try and get these companies to switch to my product which is way more advanced compare to the free version, but significantly cheaper than their paid version offering. For context they also have a cloud business for B2C where majority of the revenue comes from. The self hosting business for them is a small side business which they limit as to not to actively hurt their cloud business.
Cons - No sales experience at all - I have not gauged how many companies would be interested in paying for it yet. - Difficulty in securing contracts due to no sales experience. - No legal experience to create and work out contracts. - I do not know how big the market is for this. - Lower revenue in long term due to difficulty in getting contracts.
Estimated profit margin: 99%