Our business model
Warning: we’re really thrilled by how well our business model is going and we will brag a bit about it.
No, we’re not making loads of money (yet) and I am not writing this from a yacht in a beautiful tropical island… but let’s avoid cliches and get to the point: we have a sustainable, relaxed, efficient way of maintaining software projects and we’re making a nice business out of it.
It’s actually very simple. Let me take a little step back in case you missed it: we take care of existing software projects (read our previous post to learn more about what we do). How do we get paid for it? A recurring subscription with a fixed cost, and a monthly “time & material” bill for any extra hour we spend on it.
The fixed cost covers the basics: support (we answer to your request), monitoring (we know immediately when something is wrong), actual bugfixing (think extended warranty). Everything else is tracked and billed monthly at an agreed hourly rate.
When I explain this, most people ask “how do you get by with just billing additional hours, without discussing them with customers first?”. That’s a fair question. Our “trick” is a combination of a few good habits:
- we track very carefully the time spent on any task, down to a 15 minutes interval
- we are very transparent and send detailed reports to our customers
- we build an honest relationship where our customers know they are billed only for actual required work
Any time we work for a customer, the greatest value we get out of it is that the same customer will require our services again in the future, so we are never tempted to maximize the short-term income.
Of course, we just described a situation that should be common for most good professionals, i.e. a few trusted customers that keep requiring their services. What Refactory tries to add is:
- methodology – extract personal and professional values into strategy guidelines
- tools – create a system that’s easy to use for anyone in the team
- metrics – define numbers that let us know how good we’re doing
I may dig deeper into each of those topics in future. Today it will suffice to say, our business model is very simple and it’s going well!