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Shrinking market for a legacy software product

A shrinking market had reduced the profitability of a product that supported a legacy technology, mainframe access. 10% of the customers provided 80% of the revenue due to the volume of units they needed.

 

The price of support renewals was raised on small quantities, many small customers migrated off. The reduction in the volume of customers to support allowed cutting the support, sales and administrative staff. The price increase made the remaining small customers profitable to support.

 

All future product enhancements were cancelled, new releases only included bugs that were fixed on paid support contracts.

 

Supporting the product on Windows 7 was offered via consulting, not as a product release. No customer needed the feature enough to pay for it, and no customers dropped because of it. As a result the annual revenue did not decrease and the money that would have been spent on adding Windows 7 to the product remained as profit.

 

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