The model, and what follows from it.
WHAT IT MEANS
Software delivered over the internet, paid for on a recurring basis, operated by the provider.
WHAT DISTINGUISHES IT FROM SELLING SOFTWARE
You keep running it after the sale Revenue arrives in small amounts over years Customers can leave at any renewal Every customer uses the same running system
WHAT THAT LAST POINT CHANGES
One defect affects everyone simultaneously, and one improvement reaches everyone at once.
WHAT THE ECONOMICS LOOK LIKE
Cost is incurred before revenue Each customer is unprofitable at first Profit arrives only if they stay
WHY THAT MATTERS MORE THAN ANYTHING ELSE
The entire model rests on retention, not on sales.
WHAT FOLLOWS
That a business with excellent sales and poor retention is filling a leaking bucket.
WHAT THE RECURRING REVENUE PROVIDES
Predictability Compounding growth, if retention holds Value that accumulates
WHAT IT DEMANDS
Continuous operation Continuous support Continuous development
WHAT PEOPLE UNDERESTIMATE
That launching is the beginning of the cost, not the end.
WHAT TO ESTABLISH BEFORE STARTING
Whether you can sustain operation for years.
WHAT TO ACCEPT
That this is an operating business, not a product launch.
