How to sell clients their own idea as a SaaS?

[Creator]

I recently learned about a need/problem in my market, as two of my security freelancing clients wanted to hire me to help develop this security solution for them.

They are planning to develop the solution and make it open source. What's in it for them is that they will get the solution as well as good PR and possibly free contributions.

The price they were willing to pay for help with a part of the solution was $15k. They would then need to internally develop the rest of it, which would cost them ~$30-45k.

I preliminarily accepted their offer, but they are getting funding for it in ~6 months. So not closed yet.

I had some down time from freelancing gigs and did some research of the solution they are after, as well as its market. I ended up developing a working PoC of the whole solution just out of curiosity.

Now I haven't told my clients nor published the PoC. The source code I don't want to publish. I am not sure this PoC contains all the features they are after, but I am confident it contains the most important ones.

I am interested in turning this PoC into a product and charging monthly for its usage. My plan is to give this PoC with essential functionality for free, to discourage anyone from creating an open source solution for it. And then have a pro version with extra functionality and support for a monthly price.

Doing the math, it would make sense for my clients to use the $60k for monthly payments and get a working product with updates and support from day one. I estimated that the price would be ~$300/month, which would mean over 16 years of usage for their money. Then they wouldn't get the good PR though.

However, I am afraid how my clients will react if I suddenly show up with a full solution, when they had the idea that they would do the lion's share of it themselves. Im any case I need their feedback to add the extra functionality to the pro version.

Should I just release the PoC, let them know and then ask for feedback?

How does my plan sound? How should I approach my clients about this?

 

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[WillHurtDontCare]

Now I haven't told my clients nor published the PoC. The source code I don't want to publish. I am not sure this PoC contains all the features they are after, but I am confident it contains the most important ones.

I am interested in turning this PoC into a product and charging monthly for its usage. My plan is to give this PoC with essential functionality for free, to discourage anyone from creating an open source solution for it. And then have a pro version with extra functionality and support for a monthly price.

Moodle, a learning software platform, has open sourced their code and people can use it for free, but they still charge like $90K per year for their enterprise plan where they host it and do other stuff. Twitter also made their code open source, but good luck to anyone trying to compete with Twitter using just their code.

I wouldn't worry too much about open sourced alternatives because they require someone with skill to manage, so II wouldn't let that stop you from charging for your essential features. Cyber crime is a multi-trillion dollar annual industry, so if you have a quality solution to a big problem, people will pay for it.

I'll comment more later. I have to run.

 

[Creator]

Moodle, a learning software platform, has open sourced their code and people can use it for free, but they still charge like $90K per year for their enterprise plan where they host it and do other stuff. Twitter also made their code open source, but good luck to anyone trying to compete with Twitter using just their code.

I wouldn't worry too much about open sourced alternatives because they require someone with skill to manage, so II wouldn't let that stop you from charging for your essential features. Cyber crime is a multi-trillion dollar annual industry, so if you have a quality solution to a big problem, people will pay for it.

I'll comment more later. I have to run.

I mostly agree with you about the open source thing. There are these projects trying to solve some subset of the same problem on Github, but they are mostly undocumented, require a lot of setup to get working, and have seen updates 5 years ago. Therefore they really get no users or views, except for the really technical ones and the ones looking to develop a better solution (like me).

As the other tasks are usually really boring, I am not seriously afraid of open source projects eating my lunch. However, opening the source of my product does not help me in any way and would make it easier for future competition to get to the market.

Why I want to give the essential functionality for free is also that it makes potential clients familiar with my product and company. Additionally it provides me with vital feedback and analytics that I can use to improve product. Giving it for free will open doors to giving talks and workshops how to use it in events my clients attend to.