Fog Creek Software
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CityDesk profitable?

Joel,
How do you cope to get profit from CityDesk by giving away new versions etc.
It should be a great secret :)

Boris Yankov
Saturday, August 09, 2003

It creates goodwill which generates recommendations.

Ed the Millwright
Saturday, August 09, 2003

Free upgrades have one advantage for Fog Creek. 

They simplify support (mostly one major version to support instead of two) and maintenance (the V1 bug fixes in V2 do not need to be fixed separately in a V1 service pack).

Bernard Vander Beken
Saturday, August 09, 2003

I would imagine that the special 'loophole' mentioned on Joel's site is intended to sway more people who were on the fence due to 2.0's price jump.  If he takes a hit on each sale, but generates enough extra sales, it looks like charity to us, while giving them a better bottom line.

Patrick Lioi
Saturday, August 09, 2003

>  If he takes a hit on each sale

What hit.... are you saying it costs more to produce a copy of citydesk than $70 ?

www.marktaw.com
Saturday, August 09, 2003

Remember that 1.0 was basically not marketed at all, except for via his blog and word of mouth. While it's tempting to believe that a popular blog like Joel's means EVERYBODY has heard about it, well... that's just not the case. :)

Brad Wilson (dotnetguy.techieswithcats.com)
Saturday, August 09, 2003

It also creates 'buy-in', is that a term?  Users have a $400 product and are more likely to buy CD 3,4 etc. than switch.

Profitability wise, depends on # of copies sold.  New offices, plasma TV's ($7000) and trips to Norway don't come cheap, but my envy is showing <g>

Oops
Saturday, August 09, 2003

How much was the pro version of 1.0? People who just paid full price for it will feel ripped off.

xyz
Saturday, August 09, 2003

$300 - some people do, but people understand his motives & his reasoning and go along with it. They know he's not ripping anyone off.

www.marktaw.com
Saturday, August 09, 2003

> How do you cope to get profit from CityDesk
> by giving away new versions etc.

The equation may have had a lot to do with the number of disgruntled Home edition users there would have been (who'd IMO be very much LESS "likely to buy CD 3,4 etc. than switch") because the edition they were using was cut as unprofitable.

> People who just paid full price for it will feel ripped off.

A number of them have voiced they feelings in the CD discussion group. The majority of those seem to be rolling with the punches.

Dave
Saturday, August 09, 2003

Marktaw: "Takes a hit" as in "less dollars to keep in his pocket per sale", as in the "$270" he calculated for you on his post, as in "$270 that won't go into his pocket".

Patrick Lioi
Saturday, August 09, 2003

right... because you know those $70 guys - especially the existing $70 customers - really were willing to pay $300, but were holding out on Joel until he made a deal like this.

www.marktaw.com
Saturday, August 09, 2003

Personally, I think it's going to generate a one-time jump in sales from anyone who was on the fence (I've already got one person to buy it now).  Joel's written something about the effectiveness of "limited-time" offers -- and in fact, when you download the free version of CD, you get a coupon for 20% off if you buy within 72 hours.  (At least, that used to be the case.  I'm not sure if they're continuing that right now.)

Then all those people who bought it will start using it and recommending it to their friends... and Joel gets still more business.  Seems like a good plan to me.

Sam Livingston-Gray
Saturday, August 09, 2003

artificial scarcity. Gotta love the idea of scarcity with a product that can be reproduced an infinite number of times.

www.marktaw.com
Saturday, August 09, 2003

It won't be long and there'll be nothing artificial about the scarcity of CD for $70.

Dave
Saturday, August 09, 2003

Dave, it's a marketing term. Look it up.

Reminds me of those commercials I see for some technical school on late night TV "better call now, our operators will only be here for the duration of this program."

www.marktaw.com
Saturday, August 09, 2003

I have no doubt that they're doing well by it as well. I've been in touch with a couple of CD fence sitters. Don't know if they've taken the bait or not but I'd expect it's having an effect.

Last chance for the greatest deal of the century and all that.

Dave
Saturday, August 09, 2003

What Joel is really doing is removing the home edition.

If Joel had said, "CD2 is coming but there will be no home edition" there would be gnashing of teeth and "Oh joel, we cannot afford to buy pro."

Instead he says we have a marketing loophole, and everybody says 'kerching!'

Ged Byrne
Sunday, August 10, 2003

Good point Ged. He's not giving something away for a lesser price, becuase he was already selling the product at that price point.

www.marktaw.com
Sunday, August 10, 2003

marktaw: my point *exactly*, sorry it sounded otherwise

Patrick Lioi
Sunday, August 10, 2003

=P no problem Patrick. It's simple misunderstandings that get blown out of proportion that make the world go around.

www.marktaw.com
Sunday, August 10, 2003

I seriously wonder if Joel makes any money selling software.  I bet he makes it all on consulting, and he runs fog creek on some stock option money he made at uSoft and maybe juno during the dot.com boom. 

You have to sell a lot of software at $70/pop to cover his expenses. 

Let's assume his expenses are, and this is a low estimate, $700,000 / year.  That is something like 10000 paying customers.  That is a lot for a startup I believe. 

I think Joel is in a difficult market for a small company.  I don't think I would want to go against google, blogger, and a bunch of free options.  Personally I don't think google passes the "big and dumb" rule, but what do I know.

christopher baus
Monday, August 11, 2003

On the other hand, it would only take 2000 people @ 350 to meet that.

Brian
Monday, August 11, 2003

I read somewhere on Joel's site that FogCreek does do consulting -- I've suspected this consulting work was a big part of their revenue.

Probably a lot of it is not very glamorous but pays alright -- the sort of stuff Grant Barrett described in his essay, "Technical Consulting Is a Fat Paycheck Waiting to Be Cashed."

programmer
Monday, August 11, 2003

Re: the comments on scarcity...

Use of the scarcity principle is discussed in Influence: The Psychology of Persuasion. Coincidentally (!) it is on Joel's page of book reviews ( http://www.joelonsoftware.com/navLinks/fog0000000262.html ).

Matthew
Monday, August 11, 2003

Joel said fog no longer does consulting becuase it's not profitable for them & takes them away from developing software.

www.marktaw.com
Monday, August 11, 2003

he actually only has to sell 100 hundred-user packs of fog bugz to make $800K a year.

.
Thursday, August 14, 2003

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