XC Business Plan: Income


It is critically important for XC to establish a record of integrity, dependability, and authoritativeness in all of its business dealings. It is therefore important that we not engage in business relationships which might be seen as compromising.

Intellectual Property

Branding is a critical component of XC's business strategy, so XC will maintain and enforce trademarks and slogan marks to support its brand.

XC believes strongly in the virtues of open access and free rights to community-developed knowledge -- especially source code. Our intent is to only work on open source software, and to deliver full source code to end users.

We recognize, however, that XC, our franchises and affiliates form a community with shared business interests, which may lead us to limit access to our common knowledge base to community members. We may also choose to limit distribution of software and/or other information that is intended solely for use by franchises and/or affiliates to that community (e.g., market research studies). We may also opt not to distribute software developed for internal use.

The extent of any such restrictions needs to be carefully considered.

XC will not seek patents of any kind. Any patentable ideas discovered by XC will be published and put into the public domain.

Franchise Services

These are services that are primarily provided by XC to help franchises and affiliates grow and manage their business. Franchises benefit from consistent state-of-the-art R&D, business practices, and marketing, as well as community involvement.

These services may be fixed price (as part of the franchise agreement), or per-incident, as is most appropriate. Affiliates will tend to use a subset of these services, so are not specified separately.

XC also provides a common forum where franchises can raise issues and concerns, and can focus collective activities.

End-User Services

Franchises are expected to handle:

XC deals directly with end-users primarily through its Internet portal, although XC may also deal with end-users through franchise backup services. XC's direct end-user services focus on:

Development Funding

Proprietary software development is financed by speculators, who then try to recoup their investment by renting the software at extremely high margins (in part necessitated by the high marketing costs that are in turn necessitated by the high prices). This is, at the very least, a highly inefficient way of generating software.

By contrast, free software tends to be generated as needed by users with programming skills. While this is very effective at generating software such as operating systems and programming tools, waiting for volunteer developers may fail to produce the software we need in a timely fashion.

We believe that the free/open source software approach is the right one, but propose to "grease the skids" a bit by raising money which can be used to focus and support development.

The way we propose to do this is to encourage franchises, affiliates, and end-users to tack an optional Development Funding Contribution on to their bills -- much like a tip in a restaurant. These funds would be managed separately from XC service funds, and dedicated to development work.

Franchise Sales

A significant early source of income will be from franchise sales, which will cover setup, initial training, fixed and contracted service fees, and limited exclusivity.

Franchisees will also be given the opportunity to invest in XC.

One way to sell franchises would be to recruit independent franchise sales agents. We might pay these agents with a declining commission (e.g., 5% of service billings for first year, 4% for second, etc., until the commission expires after five years).

It is expected that franchise entry fees, as a relative source of income, will decline after we attain significant market coverage. (Per-franchise fees will, of course, tend to increase as franchise value grows.)

Affiliate fees will be nominal -- mostly tied to certification and referencing. We would like to sign up virtually everyone in the affiliated trades.


To Do:

Index | Introduction | Opportunity | Structure | Income | Implementation | End Matter

Send comment