What is more important for your software business: to come up with a new product or to create a better version of a product that already exists? The answer stands in your business values and company mission.
Each of the two paths has its own ups and downs. You can try each of them and compare the results. However, for great accomplishments, you need to look through them and decide which would bring you more benefits and would play an important role in your business growth.
In order to understand better these two software business strategies, let’s look at each of them.
When you come up with a new software product on the market, there are a few advantages that await for you. These are called the first-mover advantages.
Creating a product that does not exist on the market gives you the chance to obtain technological leadership. People might be interested in what you have to offer and if they want to buy it, you are the only supplier. Therefore, you can gain a monopoly on the market with your product.
When you are the only business producing a service, your name can easily spread among potential customers. In this way, not only will people know who you are, but they will also associate your name with certain values and innovation.
Switching costs refer to the costs that a customer supports when switching to a different product. When you are the first and only one supplying a certain product, your customers have no alternative. Moreover, even though you may have competitors in the future, there is a high chance that your clients will remain loyal to your business. This is because you were the first mover, you play an important role on the market and you are a trustworthy company.
However, being the first mover is not always the best option. The last-mover advantage comes into discussion at this moment. It may seem that this aspect refers to entering the market with a product that already exists. Nevertheless, it implies much more.
Businesses who choose to enter the market with a product that already exists can learn from their competitors’ mistakes. They know what features are mandatory for a quality software product and how to create them in order to function properly.
When you are the first mover, you create a product that will satisfy a set of needs of your customer. These needs grow and you need to adapt to them. A last mover can benefit of this advantage and create a product that will satisfy the latest needs of his customer.
Technology evolves quickly, helping software businesses to develop products more easily. Therefore, a last mover can create a product 10 times faster than his competitor did 5 years ago.
When speaking about this aspect, whether you are first or the third is not important. The main focus is that you create a product that already exists on the market and you make it at least 10 times better. Although it may seem as a new product on the market, you need to look at it as a product wearing your signature.
When working on improving an already existing product, you have the advantage of knowing its current flaws. You can create a version that works properly without any inconveniences. Also, given the technological developments, you can easily improve it according to your ideas and your customers’ needs.
In the beginning, it may be hard for people to try your product, given the fact that they already heard of it and maybe have tested it. However, because they know of the product and you present it as the latest improved version, they may want to try it and thus, buy it.
Make sure that when you choose one of these options, you first look at your objectives and your business mission. Remember that the smart choice will boost your success and grow your business.