Sell a package or Host and sell a service?

What are the pros and cons of these alternative business models?

[georgeek]

A client has involved me in a dialogue on his proposed alternative business models and I need input from anyone with some experience or thoughts on the subject!

The client is about to launch a software product to medium/large corporates. The product involves interaction between the corporate website, the corporate human resources department and the internet public.

It is .NET MS SQL based and requires limited, cosmetic customisation for each corporate customer.

My client has in mind two possible business models.

1. Sell and support the software as a package on their customers' server.

2. Provide a service by hosting the software themselves.

Ideally I think they should provide both but my client wants to start with one and provide the other later.

Thoughts on the pros and cons of these alternatives would be much appreciated.

[Travoli]

Is it easy enough to sell both?

[claus]

Go for hosted at entry level and sell (premium priced) packages for heavy-duty customers. ASP sale often works this way and it also saves your server(s) from the increased load of the high volume customers.

/claus

[georgeek]

Travoli Yes - He thinks the market is for both but wants to concentrate all his efforts on one or the other initially. His research indicates that it will be no more difficult to sell to one group or the other. His sales and marketing costs will be the same as well but the methods will be different. He thinks it might be cheaper in terms of his support costs to provide a hosted service but I am not sure about this factor.