Monthly Archives: March 2009

GraphicDesignerToolbox

I launched my product a year ago, but so far haven’t had much luck selling it. I desperately needed advice from a person that could take a look at my situation and help figure out what’s wrong and how to move on. Andy Brice has been through all this and knew exactly what I was struggling with.

Simon Strandgaard, www.GraphicDesignerToolbox.com

gdt-screenshot

GraphicDesignerToolbox is a Mac OS X application for creating computer generated graphics. It allows users to snap together generative and filter blocks to create a vast range of different types of images, without any drawing or programming. It is an impressively slick and well engineered piece of software. But sales were unsatisfactory. I did some consulting for the author, Simon Strandgaard, focussed on improving the marketing and the user’s initial experience of the product. As a result he has made a lot of changes, including:

  • Re-thought the product positioning, marketing message and target customer.
  • Renamed the application to GraphicDesignerToolbox (from the less descriptive ToolboxApp).
  • Moved the website from ToolboxApp.com to GraphicDesignerToolbox.com.
  • Commissioned a new application icon.
  • Completely rewritten the website.
  • Improved the initial user experience with a quick tour and easy to load samples.
  • Improved the product documentation.
  • Changed the trial model.
  • Increased the price.
  • Released version 1.0.

You can see captures of old and new versions of the website below:

toolboxapp_cropped1

Old home page - click to enlarge

graphicdesignertoolbox

New home page - click to enlarge

It is has been very rewarding to see the product and marketing improve so much in just three months. Especially as someone else was doing all the hard work! I think the changes are a huge improvement all round and I wish Simon and GraphicDesignerToolbox every success. v1.0 was released today and Simon tells me he has sold as many licences today as in the previous 5 months.

If you have a Mac you can head over to GraphicDesignerToolbox.com and download the trial.

I will be speaking at SIC 2009

sic2009I will be giving a talk entitled “10 mistakes microISVs make” at the Software Industry Conference 2009 (July 16-18, Boston). The talk will be based around 10 of the most common mistakes I see as a member of the microISV community, as a buyer of software and as a consultant to microISVs (some of which I have made myself).

SIC is the largest conference aimed at microISVs, shareware authors and other small software vendors. This will be the first time I have been to SIC and I am really looking forward to it.

Registration for SIC is only $229 if you register before 1st April.

Digital River up to their old tricks?

Popular blog BoingBoing have reported on esellerate trying to sneak worthless and unwanted extras into their shopping cart. Some of the commenters on the post seem to think this could be an honest programming mistake. Given that esellerate’s parent Digital River is widely known and reviled for dubious upsells, I doubt it. Any vendor that chooses to use a Digital River subsidiary for their ecommerce has only themself to blame if Digital River does the same to their customers. Have you checked your shopping cart recently?

The two types of reseller

resellersIn theory, the Internet allows customers to find products without the need for middlemen (unless you count Google). In reality, the age of full disintermediation has not yet arrived, and perhaps never will. Middlemen are still important. One of the more important types of middlemen for a software vendor is the reseller. However it is important to realise that there are two completely different types of reseller. One can be very useful to you as a software vendor, the other is generally a pain in the backside. They should be treated accordingly.

Value added resellers

A value added reseller buys your product and then resells it to their customers. Usually they will buy from you at a discount and resell to their customer at full price, pocketing the difference. Typically a reseller will expect between 25-50% discount depending on a range of factors including what services they provide (e.g. localisation and support), the price of the product  and volumes sold. Often the discounts are on a sliding scale, with the discount increasing with sales volume. This type of reseller can add value for you and the cusomer in various ways. They may:

  • have expertise in markets that you don’t
  • be able to reach markets that you can’t, due to barriers of language, culture or geography
  • localise your product and marketing materials
  • provide first level support.
  • sell your software as part of a package including other services, software and/or hardware.

However there are a few things you have to look out for:

  • You don’t want to end up competing directly against your own resellers in existing markets.
  • Resellers may undercut you on price.
  • Beware of offering any sort of exclusivity.
  • Customers may sign up as resellers just to get a discount for a single purchase.

You can try to avoid direct competition with resellers by only picking resellers in different markets. You may also be able to specify certain terms and conditions, for example that they can’t bid against you on certain phrases in Google Adwords. But, depending on the law where you live, you can’t tell a reseller what to charge the customer. For example, under UK law, this is considered  ‘price fixing’ and is illegal. So make sure you charge a reseller a percentage of your recommended price, not a percentage of their sale price, to make price cutting less attractive. For example, if your product retails for $50, charge the retailer X% of $50. Not X% of what they sell for. Otherwise they could undercut you by selling for $30, and still make a profit, or even give your software away for free.

Resellers will often ask for exclusivity. Exclusivity can provide extra motivation to the reseller (a reseller won’t want to put a lot of effort into marketing your software if you can pull the plug at any time for no reason), but what if the reseller loses interest in your product?  It happens. You could be left in a very bad position unless you can terminate the agreement. So you should agree some sort of minimum volume of sales for a reseller to retain exclusivity.

Offering a sliding scale discount with no discount for the first purchase will discourage customers from trying to take advantage of reseller discounts.

Value subtracted resellers

The other type of middleman that call themself a reseller are really just acting as outsourced purchasing for your customer. They buy your software on the customer’s behalf so that the poor darlings in the customer’s accounts department only get a single invoice for software sales per month, instead of one per vendor. They don’t add any value at all as far the vendor is concerned.  In fact they just make the vendor’s life more difficult by getting between the vendor and the real customer. I had one reseller of this type who, after some twenty emails exchanged, failed to workout how to buy my software from my website. How dim can you be that you can’t click a ‘buy now’ button and fill in a few details when that is what you do for a living? Hence I call them ‘value subtracted resellers’.

This type of reseller will often ask for a discount. Don’t give it to them. The real customer has probably already instructed them to buy your product, so a discount won’t help to close the sale. Also the reseller might pocket the discount instead of passing it on to the customer. If anything, charge them more.

GoogleCheckout price increase

googlecheckoutIt was always on the cards that Google was going to raise the prices of their payment processing service, GoogleCheckout. Up till now I had effectively used GoogleCheckout for free, as they offset their 1.5% + £0.15 processing fee against my Adwords spending. But they are dropping the Adwords offsetting and introducing a new tiered pricing structure.

As I put most of my payments through PayPal I will probably be on the highest price tier of 3.4% + £0.20 per transaction. This means that a £19.95 sale will cost me £0.88 (4.4%) through GoogleCheckout as opposed to the £0.68 (3.4%) I pay through PayPal. I wouldn’t mind the higher fees if I got a better service than PayPal. Unfortunately GoogleCheckout still has all the flaws I commented on back in April 2007, namely:

  • Google still don’t accept payments in more than one currency (e.g. as a UK resident I can only accept payments in £). Expecting anyone outside the UK to pay in £ is a very bad idea.
  • Delays between customer purchase and payment clearance result in angry and/or confused emails from customers wondering why their licence key hasn’t arrived. This has improved since the early days of GoogleCheckout, but it is still an issue.
  • Google’s option to anonymise the customer email address is a royal pain in the backside for the vendor.  It causes me of lots of wasted time and unecessary emails.
  • The customer *has* to sign up for a GoogleCheckout account (unlike PayPal).
  • There is a £7 chargeback fee (PayPal don’t charge a chargeback fee).
  • Customers prefer PayPal.

About the only advantage of GoogleCheckout is the GoogleCheckout badge that appears alongside your Google Adwords ad. In their email to me explaining the price rise Google claim:

Advertisers who use Checkout have the opportunity to display the Checkout badge on their ads, which has proven to  be an effective way to differentiate ads and attract user interest. Checkout users click on ads 10% more when the ad displays the Checkout badge and convert 40% more than shoppers who have not used Checkout in the past.

My own measurements showed a worthwhile effect from the GoogleCheckout badge, but I am not convinced it is worth the additional problems and expense of GoogleCheckout just to get the badge.

I already push PayPal more than GoogleCheckout (e.g. you have to click a link from my US dollar payment page to see a GoogleCheckout button). The price increases will probably result in GoogleCheckout being pushed further into the background for use just as an alternative for those that don’t like PayPal. I don’t know if Google will punish me by removing my Adwords badge.

Note, in order to continue to use GoogleCheckout from 5 May 2009 onwards, you must login to your account and accept the new Terms of Service between 18 March and 4 May.