Comments on: Selling your software in retail stores (all that glitters is not gold) http://successfulsoftware.net/2008/04/21/selling-your-software-in-retail-stores-all-that-glitters-is-not-gold/ Successful software requires more than just good programming. Fri, 16 May 2008 18:57:47 +0000 http://wordpress.org/?v=MU By: Софт на Ближнем Востоке: Ужасы розничной продажи http://successfulsoftware.net/2008/04/21/selling-your-software-in-retail-stores-all-that-glitters-is-not-gold/#comment-10308 Софт на Ближнем Востоке: Ужасы розничной продажи Fri, 02 May 2008 08:57:52 +0000 http://successfulsoftware.wordpress.com/?p=334#comment-10308 [...] только около трети изначальной цены. А потом нашёл вот такую статью (на английском). Там проводятся еще более печальные цифры – [...] [...] только около трети изначальной цены. А потом нашёл вот такую статью (на английском). Там проводятся еще более печальные цифры – [...]

]]> By: Horror of Software Retail | Software Business in the Middle East http://successfulsoftware.net/2008/04/21/selling-your-software-in-retail-stores-all-that-glitters-is-not-gold/#comment-10307 Horror of Software Retail | Software Business in the Middle East Fri, 02 May 2008 08:06:20 +0000 http://successfulsoftware.wordpress.com/?p=334#comment-10307 [...] this is why they ask for such high percent to sell our products in their stores. But then I found this article that also discusses retail sales for software. The article gives even worse numbers of 5-10% that [...] [...] this is why they ask for such high percent to sell our products in their stores. But then I found this article that also discusses retail sales for software. The article gives even worse numbers of 5-10% that [...]

]]> By: Marcus http://successfulsoftware.net/2008/04/21/selling-your-software-in-retail-stores-all-that-glitters-is-not-gold/#comment-10277 Marcus Fri, 25 Apr 2008 11:47:45 +0000 http://successfulsoftware.wordpress.com/?p=334#comment-10277 Hi Andy, I have retail experience in the food industry (in another life). My experiences with food retailing translate fairly accurately with Al’s description of software retailing. We made pastries such as family sized quiches. We would sell a product for a little over $2.00 (including profit) to the distributor. As a customer you could buy the quiche from the supermarket deli for $9.95. A 500% mark-up between manufacturer and retailer is common. Many supermarkets also had a return policy for unsold goods – if they didn’t sell it, they wouldn’t pay for it. This encouraged the supermarkets to ensure they looked fully stocked as they weren’t burdened with the cost of over stocking. Another major supermarket chain deducted allowances from the invoice you sent them. There was 4% for storage (you paid rent for stock sitting in their warehouse), 4% for breakages (whether any stock was damaged or not), another percentage for ‘weekly specials’ and son on. These totalled almost 25% which was taken off the invoice amount (after they had already haggled a good price). Regards - Hi Andy,

I have retail experience in the food industry (in another life). My experiences with food retailing translate fairly accurately with Al’s description of software retailing.

We made pastries such as family sized quiches. We would sell a product for a little over $2.00 (including profit) to the distributor. As a customer you could buy the quiche from the supermarket deli for $9.95. A 500% mark-up between manufacturer and retailer is common. Many supermarkets also had a return policy for unsold goods – if they didn’t sell it, they wouldn’t pay for it. This encouraged the supermarkets to ensure they looked fully stocked as they weren’t burdened with the cost of over stocking.

Another major supermarket chain deducted allowances from the invoice you sent them. There was 4% for storage (you paid rent for stock sitting in their warehouse), 4% for breakages (whether any stock was damaged or not), another percentage for ‘weekly specials’ and son on. These totalled almost 25% which was taken off the invoice amount (after they had already haggled a good price).

Regards -

]]> By: Andy Brice http://successfulsoftware.net/2008/04/21/selling-your-software-in-retail-stores-all-that-glitters-is-not-gold/#comment-10274 Andy Brice Wed, 23 Apr 2008 17:10:01 +0000 http://successfulsoftware.wordpress.com/?p=334#comment-10274 You can make very good good profits on a purely product based business, whether you are a small or large software company. Also products are inherently more scalable than services. You can make very good good profits on a purely product based business, whether you are a small or large software company. Also products are inherently more scalable than services.

]]> By: Small Business Computer Consulting Blog http://successfulsoftware.net/2008/04/21/selling-your-software-in-retail-stores-all-that-glitters-is-not-gold/#comment-10269 Small Business Computer Consulting Blog Tue, 22 Apr 2008 22:52:21 +0000 http://successfulsoftware.wordpress.com/?p=334#comment-10269 There’s a pretty good reason that there is only a handful of really successful software providers out there, and it’s pretty much exactly what you mention in your post and also what’s mentioned in the above comment! The truth is, the real profit for those that aren’t the size of Microsoft, Red Hat or some other major software company (and what small software company is?) is in sophisticated, specialized IT services. Solution providers and computer consultants with a focused business plan and a well-defined specialty stand to enjoy a lot larger profit margins than a small software developer. A big reason is, they’re not working with “products,” which inevitably bring about price-sensitive buyers and the inevitable question, “How much is this going to cost?” Those that pay for IT services on an on-going basis view the price they pay in terms of a benefit and an investment in business growth, not a price tag. This means that they are less likely to balk at high, competitive rates and more likely to understand the value of the service being provided. Typically those small developers that are successful at selling software (assuming they are not the size of Microsoft or some other huge company) are successful because they don’t make that product sale their main focus, rather tie it into services and benefits they provide to customers above and beyond a mere commodity. There’s a pretty good reason that there is only a handful of really successful software providers out there, and it’s pretty much exactly what you mention in your post and also what’s mentioned in the above comment! The truth is, the real profit for those that aren’t the size of Microsoft, Red Hat or some other major software company (and what small software company is?) is in sophisticated, specialized IT services. Solution providers and computer consultants with a focused business plan and a well-defined specialty stand to enjoy a lot larger profit margins than a small software developer. A big reason is, they’re not working with “products,” which inevitably bring about price-sensitive buyers and the inevitable question, “How much is this going to cost?” Those that pay for IT services on an on-going basis view the price they pay in terms of a benefit and an investment in business growth, not a price tag. This means that they are less likely to balk at high, competitive rates and more likely to understand the value of the service being provided. Typically those small developers that are successful at selling software (assuming they are not the size of Microsoft or some other huge company) are successful because they don’t make that product sale their main focus, rather tie it into services and benefits they provide to customers above and beyond a mere commodity.

]]> By: Tony Edgecombe http://successfulsoftware.net/2008/04/21/selling-your-software-in-retail-stores-all-that-glitters-is-not-gold/#comment-10266 Tony Edgecombe Tue, 22 Apr 2008 06:45:52 +0000 http://successfulsoftware.wordpress.com/?p=334#comment-10266 I did some consulting work for one of the major distributors into retail in the UK a few years back. As I spent quite a lot of time working on their invoicing I got to see what sort of deals the publishers were getting. Pretty much everything Al said is correct. But it was actually worse than that, their whole culture was about screwing every last drop of blood out of their suppliers. This meant long payment times, large returns and quibbling over every last detail. Eventually I had to sack them as a client because they couldn't learn to treat me any differently from their other suppliers. I did some consulting work for one of the major distributors into retail in the UK a few years back. As I spent quite a lot of time working on their invoicing I got to see what sort of deals the publishers were getting. Pretty much everything Al said is correct.

But it was actually worse than that, their whole culture was about screwing every last drop of blood out of their suppliers. This meant long payment times, large returns and quibbling over every last detail. Eventually I had to sack them as a client because they couldn’t learn to treat me any differently from their other suppliers.

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