Selling "Intranet" solutions - Review my business model

The text in bold is pretty much my issue with your business idea (I wouldn't go so far as to call it a "model" yet). What exactly are you providing that your customers (whether it's one school with 300 people or down the line 1,000 schools, each with 30,000 people) can't easily do themselves? I just don't understand your value proposition.

If you were to be able to offer them an internal social network that was uniquely tailored to the needs of users in a higher education environment that might be something. But if all you're going to do is install Wordpress/Buddypress and add a few customizations here and there, I just don't see it. The problem isn't that you're using Wordpress/Buddypress -- that might actually be a good platform to build upon, especially if you're trying to use Lean Startup principles and get your product in front of your customers as fast as you can. But the salient phrase there is "build upon" -- and that assumes you're actually building something.

Another potential value proposition would be if you had a lot of experience hosting and maintaining Wordpress/Buddypress sites and/or you were hosting a lot of them and so could take advantage of economies of scale. But again, this doesn't seem like the case. Moreover, if your school is like most universities, computing resources (especially bandwith) are relatively easy to come by, so what you're offering had better be significantly better than hosing in house.

Right now it seems like you're basing most your business on the fact that you know about this open-source social network system and they don't. Essentially, rather than trying to actually offer something of value, you're just trying to cash in on an information asymmetry -- and not a very good one at that. But that doesn't seem like a long-term business strategy. Eventually, they'll find out that you've just created a Wordpress/Buddypress site and whether you're charging them as a SaaS or whether your charging them a monthly retainer, they're going to want to know why you're worth the money they're paying you.

Again, I bolded the most telling word to me -- and it's a word very commonly thrown around the WF. "I want". The thing is, it doesn't matter what you want. It matters what the customer wants. That obviously goes for the product, but it also goes for the pricing strategy. What sort of pricing strategy is going to make most sense to a school like that? What is their procurement process for purchasing SaaS -- can they even do it? What is their budgeting process like and how do you make sure that what you're offering fits into that at the right time? You're talking about them spending about $20,000/year on your service -- perhaps not a huge amount, but my guess is that would have to be budgeted in the previous fiscal year and go through a whole bunch of approvals. Might it be easier for them just to hire you on as a consultant? No idea. That's the kind of thing you'll need to find out.

I really don't know. I don't know what your offering is, I don't know what the school's ability to pay is, I don't know you. To be frank, the way I understand your project ("Install a vanilla Wordpress/Buddypress system/Host and maintain it") wouldn't interest me at all, so my price would be pretty high just to try to get them to find another option. In that case what I'd do is estimate how many hours it would take me to get Wordpress/Buddypress deployed and multiply that by my hourly rate, which for me in a project like this would be $100 - $200/hour.

On the backend, I might tell them that they should pay me a retainer for five hours of work and then I'd charge them my hourly rate for any additional work I did.

But I'd also explain very clearly what I was going to do -- from installing and deploying open source software to maintaining it -- so that they'd know exactly what they were getting for their money. And I'd also outline some other approaches that they could take other than hiring me, not only because it's not a project I'd find very interesting, but because (1) I think being honest with your customers is crucial to them being happy and (2) they're going to figure it out anyway.

Successful businesses are built when two things happen:

1. The business is taking in more revenue than the amount of resources they are spending to provide a product or service.
2. The customers derive more value from the product/service they are purchasing than the amount of money they are spending on it.

In other words, both the business and the customer need to derive a profit from the business transaction. But right now you seem overly focused on the first -- your own profitability. But what's the customer getting out of your business? What are you offering them that they can't get elsewhere or provide themselves? Right now the way you've laid it out, I just don't see it.

This is not meant to be discouraging. Actually, I think there could be great possibilities for creating internal social networks to universities on a SaaS model (though I certainly haven't done any market research to know if that's true). And I think if you have an inside connection with your school that might get you your first paying customers, that could be a great opportunity. I just think you need to really think about your customers and their unique needs rather than focusing so much on how you'll get paid.

As a final note, I'd recommend researching the "Business Model Canvas" and filling it in if you haven't already. It's sort of like writing a business plan, but from a Lean Startup approach and as such it's much, much quicker to do, and easier to modify as you learn more about your product, your customers, your market and your business environment.

Good luck!