Dave Hall Consulting logo

$100 Drupal Site Series: Part 6 - Business Considerations

During this series on creating a profitable business around the concept of building Drupal sites for $100 I have attempted to demonstrate that there is a viable business model here. I don't believe it is a business that will suit everyone and nor do I believe every developer will want to work on such a project, but for some this will be an excellent opportunity. Today I will cover some of the things that I think you should consider before investing too much in this business model. Some of this is just basic business sense which isn't specific to this project.

Dollars and Sense

Oscar Wilde once wrote "What is a cynic? A man who knows the price of everything and the value of nothing". If you want to build this type of business, be frugal, but not a Scrooge. Generally a good developer will cost you more in salary than an average one, but the good developer will work out cheaper in the longer term. A similar thing goes for hosting, avoid Virtuozzo based VPS and look for someone offering the more expensive Xen or KVM based platforms, they are less likely to oversell capacity. At the same time keep an eye on the markets you are buying services in to ensure you are always getting the best value for money.

Recognise when you have to pay for something. Spending a little now might save you a lot in the long run.

In House vs Outsourcing

It makes sense to outsource some services, for example email. You want to focus on offering a high quality Drupal driven SaaS, having to support email too is a lot of hassle, use Google Apps for Domains or similar service.

Some things are better performed in house, such as design and themeing. There are businesses around who offer cheap PSD to Drupal theme conversion services, but these services usually cut corners which will cost you more in the longer term. Having someone in house means that they can learn from others on your team and do things the right way for your business.

Pricing

Although the theme of this series is "$100 Drupal site", that doesn't mean every site you sell should be $100. You need to research your target market/s and make sure you are pricing your product/s appropriately. I would seriously consider offering 3 levels of service, each level should offer more options, bandwidth and storage. Some customers will be drawn by the initial $100 price tag, but when they see the feature list, the $250 product might be more appealing. Give customers a sense of choice.

Options and Up Selling

Find opportunities to sell extras to your clients. Not everything needs to be included in the base level package. I discussed enhanced support offering in my previous post, which could provide additional revenue.

Most of the clients who sign up for this service will have no interest in paying for a custom theme and/or development, but once you have them through the door you have more chance of selling such extras to them. Find the higher traffic clients and connect with them, see if they want more. The price jump is likely to be significant, but if they can see value in it, they may pay for it.

Domain Names

Domain names is a great opportunity to generate extra revenue. By default customers should get biz-name.example.net, and charge them a fee if they want to use another domain, such as mybiz.com. Most people know that GoDaddy sells domains for around 10USD, while Melbourne IT charge around 75USD. Sign up for a reseller account with one of various domain registrars and offer customers domains directly from your service. If a customer brings their own domain charge them a fee, if they buy the domain through you advertise that you waive the setup fee, but then include it in the pricing of the domain name.

Partners

Seek out partners. If you can find a company which offers a service which is a good fit with your business, work out a deal with them. Be it bulk licensing, reseller, commissions, find something that works for both parties. Your customers can benefit from such arrangements too.

Giving Back

Previously I mentioned that you will be benefiting from the great work of the Drupal community, you should acknowledge this benefit by contributing back to the community where it is appropriate. Not only does this help build the profile of your business in the community, it can reduce your maintenance workload. For example if you have a patch which fixes a bug or adds generically useful functionality to a module, push it back up stream, so you don't have to maintain the patch. Consider having a budget for sponsoring community events to help build good will.

Data Exports

Allow customers to export their site and go host it with someone else. This might sound counter intuitive, but if they are just a base package customer and you are hosting them, they have paid you. If they are only 2 months into 12 month service, which should be non refundable, then let them take their site, that frees up server resources. It is also the ethical thing to do, don't make your money because people are locked into your service, they will eventually resent you for it.

Licensing

Drupal itself is licensed under the terms of the GPLv2 (or later) with some contrib modules depending on GPL compatible code. If you are contributing code back to drupal.org it must be under the terms of the GPLv2. You could choose to offer the non PHP parts of your code under CC-BY with an attribution in the footer, you could release your features under the terms of the AGPLv3. These are business decisions you must make in the context of the rest of your business.

Pay for Expert Advice

There are times when you need an expert. Get a lawyer to check your Terms of Service and any significant contracts. Use an accountant to get your financial affairs right from the start. If your servers are performing poorly and your Sys Admin can't work it out, pay for someone who can. Sometimes it is better to pay for something than trying to learn how to do it yourself.

Share

Blog about your experiences, share the knowledge. I'm not advocating putting your entire business plan online, but discuss problems you've solved, code you've created so others can benefit from your experiences. Don't be afraid to share, Scott Adams sums this up perfectly "Ideas are worthless. Execution is everything". I have nothing to fear in publishing this blog series, after all it is just my ideas.

What's Next?

This is the last substantial post in this series. I have tried to break it up into digestible chunks. Thanks for taking the time to read my posts and I welcome any comments you may have.

I plan to let things sit for a few days. Over the weekend I plan to review the comments posted and emails received as part of preparing a summary response and conclusion. Anything else I think of will get tacked onto that post.

Excellent stuff in this

Matthew McDougall wrote:

Excellent stuff in this series, Dave. I mentioned before that I was worried about this subject and where you were heading with it; i'll admit, based purely on the title. I had feared that you were actually going to be pitching something quite different, in the direction of "We all charge too much for web development. Drupal sites should cost less!". Instead you've essentially written up the beginnings of an excellent business plan. There is some really great advice in here, which would be useful for almost anyone thinking of starting a web based business (of any kind).

I'm really looking forward to picking your brains in Brisbane next month. A couple of quick questions for you though :

1. What was the motivation of putting this together? Are you planning to start a similar enterprise, or did you just feel that your experience deploying large numbers of sites at once has left you with some good foundations that might help others?

2. Do you foresee this as a business that would require startup capital to get moving? I don't doubt the value of having all the right people for the right jobs, but "done right" the people and time required to get this moving as you are suggesting could be pretty expensive, and probably unlikely to work as a "We're all working on this on the side, for a pay day down the road". As developers these days, for better or for worse, we have a tendency to think "I could probably do most of this on my own or with a friend, and get people in later when they are really needed"; but what you have put forward here is a pretty detailed business, not necessarily a "try it and see". Have you done any estimates of the costs involved to get something like this moving? Similar projects like Drupal Gardens and Buzzr obviously have the benefit off piggy-backing of their existing teams and income (Acquia and Lullabot).

Anyway, great job on the series. I really enjoyed it, and it's certainly got me pumped up for my new projects in 2011.

Added Wed, 2010-12-29 22:24

Great closing post

Jedihe wrote:

Very good closing post for the series. I've read through all entries and found some highly valuable points. Thanks a lot!

Added Thu, 2010-12-30 02:40

Great articles!

MvK wrote:

Thanx for all the info! Food for thoughts ;)

Added Thu, 2010-12-30 04:22

Thanks for this great series

pfrenssen wrote:

Thanks for this great series of posts!

Added Fri, 2010-12-31 05:58

Thank you for sharing great

Hai Nguyen wrote:

Thank you for sharing great business plan!

Added Fri, 2011-06-10 02:24