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Software Development from a Coffee Can?

Using Integrated Payments to Fund Ongoing Development

You’ve probably seen the commercial on TV. A dad is teaching his son about saving for things that he wants. So, they write “Baseball Mitt” on a piece of masking tape and stick it on an empty Folger’s Coffee can. Next scene shows both of them throwing coins into the can, and before you know it, Dad is handing over a new baseball mitt to his son. This same process is repeated for a new fish tank, sled, stereo . . . well, you get the picture.

What is unknown in the commercial is how long this process takes. Certainly throwing in some spare change isn’t going to buy the desired item the next day, but the point is clear – having money for something is better than not having money for something.

There’s an important learning here. Software companies often cannot charge customers or their customers’ end users for bug fixes and ongoing development of features and functionality. It’s just considered a cost of doing business that sometimes hits the bottom line pretty hard. But it doesn’t have to – not if you have integrated payment capabilities in your platform and you have the right payment processor.

Payment Residuals in the “Can”

In all transparency, unless you’re funneling a lot of transactions through a single payment partner or you have a white label relationship, revenue from payments is probably not going to create a huge boon to your bottom line – not immediately anyway. The question is: “are you getting any revenue for accepting payments through your platform.”

If you answered “no”, then you’re missing an incredible opportunity to apply a new source of income directly to your development coffee can.

If you answered “sometimes,” then you’re missing an incredible opportunity to apply a greater source of income to your development coffee can.

Case in point

I was recently talking with someone who had been consulting with a software company that supported six payment processors through its platform. Only one payment processor was sharing revenue. My consultant friend was completely baffled that this company wasn’t trying to funnel all or at least most of its customers’ payments through the one processor that was giving them money to do so. Leaving revenue just sitting on the table didn’t make sense – not when there were ongoing expenses that could have been offset by that income.

Surprising How Quickly the Can Fills Up

You may be thinking “why bother?” If there’s not a windfall associated with payment processing, it’s no great loss if I don’t get a slice. Well, tell that to the little boy who got a new baseball mitt, fish tank, and sled from his dad’s spare change. Sure it may take a little time to build up, but you’d be surprised at how quickly it accumulates – certainly faster than adding no new money for development.

Broader Implications to Your Business

What’s the impact of creating funds to support just one additional development project this year? Would those enhancements have a ripple effect on customer retention? Might they attract new customers? Do they improve the customer experience? All are key contributors to revenue growth for your business. And, the more customers you have, the more payments that will funnel through your platform. The more payments, the more payment revenue. The more payment revenue, the more quickly your development coffee can fills, and the cycle continues on and on.

Summing Up the Lesson

So what is the learning for software companies? I have learned that some money is better than no money, particularly when there are many development goals and product roadmaps to fund. You can generate more revenue, more quickly by teaming up with a payment processor that is willing to throw a portion of its revenue right into your development “coffee can.” It’s a simple message but impactful!

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