17. Retail

If you sell your software through a retailer (i.e. shops) the retailer will be doing the promotion for you. But big chains don’t want to talk to hundreds of software companies, so you will almost certainly have to go through a distributor such as Avanquest.

Distributors and retailers will take a very big bite out of the cherry before it gets to you. I once approached a publisher of prints and posters about selling some of my photographs. They told me that a photographer typically gets 2.5% of the retail price of a print. 2.5%! I don’t know how software retail royalties compare, but I get the impression that they aren’t vastly better. Maybe that is fair given the huge overheads of bricks and mortar shops, but its pretty dismal compared to what you get when you sell direct to the customer on the Internet. Be very wary of providing support at these sorts of margins.

But it gets worse. I have heard that a retailer can order thousands of units, not display them and then return them once the software is obsolete (e.g. a new version has been released). You have to pay to have the CD printed, pay to transport them and then pay to have them destroyed – and you never get a penny. Even when you do get paid, many of the big chains are notoriously late payers. A good distributor might shield you from some of this, but the more I find out about selling retail the worse it sounds. Obviously some products do very well in retail (e.g. popular games), but it is a very different world to selling direct, for example the packaging suddenly becomes a lot more important.

Pros: Retailers can shift huge volumes of popular titles.

Cons: Royalties per unit are pretty meagre. The retailer and distributor seem to hold all the cards.

Data point: I tried to interest a few big department store chains in selling PerfectTablePlan. One of them showed some interest but they wanted me to pay for shelf space and give them the lion’s share of the profits. I reckoned I would have been losing money on every copy they sold.

18. One day discounts promotions

A number of sites have appeared that offer a different software product each day at a deeply discounted price, for example www.bitsdujour.com . The site takes a percentage of these sales.

Pros: Some of the discount sites have quite a large following so you can potentially get a lot of exposure and quite a few additional sales.

Cons: Risks annoying customers who have just bought your software at the full price if they find out about the promotion. Could devalue your product in the eyes of some people.

Data point: I haven’t tried this approach (yet).

19. ebay

Vast amounts of buying and selling takes place on ebay, including software.

Pros: Vast numbers of potential buyers.

Cons: Ebayers want stuff cheap, very cheap. Selling on ‘fleabay’ might not be great for the image of your product.

Data point: I ran a couple of ads for PerfectTablePlan on ebay.co.uk as ‘buy nows’ at my standard price of £19.95. I thought I might get some clickthroughs to www.perfecttableplan.com even if I didn’t sell any through ebay. I got no sales and very few clickthroughs. I might have got better results by selling at less than the main website, but that would have undermined my standard price.

I have seen posts on forums by someone saying that ebay was the most effective sales channel for their low priced speed-reading software. Interestingly they said that fairly cheesy ads (I am paraphrasing from memory!) worked better for them than slicker ones.

20. Cross-selling/bundling

Cross-selling is where you offer your product, usually at a discount, to someone who has just bought a similar product. Bundling is where you offer 2 or more complimentary products together, usually at a discount from buying them individually. For example, if you buy Macro Scheduler at the moment you can get 25% off a copy off DirectAccess. As these are two different types of productivity tools it seems like a good match.

Pros: The other product is doing all the promotion for you. You have to buy something else to get the discount so it is less likely to devalue your product in the customer’s eyes.

Cons: It might not be easy to find a product that will be of interest to the same market, but doesn’t compete with your own.

Data point: It isn’t something I have tried yet. But if you have software (or a service) in the wedding or event market that you feel is complimentary to my seating arrangement software, feel free to email me.

Part 6 >>