Whenever possible, especially for software, try to offer standard products and services versus customized “one-offs”. Make it a point of setting expectations for prospects insisting on custom solutions and unwilling to accept trade-offs or “work-arounds”. Standard products allow for more efficient manufacturing and support, resulting in greater economies of scale.
When does offering Custom Solutions work?
1. When you are in a niche and competing against bigger companies who aren’t as flexible (or even want the business). (You still have to set expectations and recoup your costs.)
2. When you do not have a standard product solution and want the business for strategic or economic reasons.
Customized Solutions’ Advantages:
1. Tailored to the exact needs of the customer. The product is made to meet the user requirements and fit his or her unique user experience.
2. User does not have to change his existing processes (or as much as using standard product).
3. Learning curve for users will be lower.
Customized Solutions’ Disadvantages:
1. Greater Initial costs. The buyer would have to pay for all the development work since he or she may be the only user (unless the supplier is willing to defray and "eats" some or all of it).
2. Updates also require custom work. The user is stranded with his version and misses new features and bug fixes added in future standard updates. Technology changes quickly, especially hardware, chips, and firmware. For example, a custom software product created using Windows 7 would nix future compatibility with Windows 8.
3. Higher upgrade costs. Cost to develop the update or upgrade (if even feasible) would be borne by the sole user. Users of standard product will have upgrades where the development cost is spread out amongst the user base.
4. Higher support costs. The supplier will have to dedicate or allot resources in documenting, researching and testing customer issues. That cost must be defrayed either by a higher initial sell price or special support contract. Standard knowledge forums or user groups may not be applicable.
5. Product knowledge and expertise will decrease over time as staff changes – for the user and the supplier.
6. Bug fixes may take longer. Remember the 80/20 rule – the custom solution user is in the minority and may not get the priority versus the hundreds or thousands of other standard users.
Frank Lio is a Product Manager, Strategist, and Change Agent in the Hi-Tech industry. His growing track record of successes include creating 3 winning software products, leading nationwide seminars, and turning around a failing business unit. He is currently serving a dual role as Product Manager and Business Team Support Manager at Instron ITW.
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