Category Archives: guest posts

Donationware – An interview with Hillel Stoler of GetSocial

This blog is hosted on WordPress.com. This has its advantages, but it means that I can’t use the huge range of add-ins that are available to those that host their own WordPress server. In my attempts to find a simple way to add social bookmarking to WordPress posts I stumbled across GetSocial, a Windows desktop program that generates the social bookmarking icons you see at the bottom of my recent posts. GetSocial is donationware – the author requests a small donation if you find the software useful. But the software is not crippled or time limited in any way and the donation is optional. I found the software useful so I made a small donation.

I use a number of donationware products. Human nature being what it is, I rarely get round to making donations – despite the best of intentions. It just never quite makes it to the top of my ever expanding TODO list. I have also heard various tales about how dismal the donation rates are. So I was curious about how well the donationware model works in this particular case. I emailed the author of GetSocial, Hillel Stoler, and he was kind enough to do this interview.

What was the motivation behind GetSocial?

GetSocial is not a business – it’s my contribution to the WordPress.com community. I needed a way to generate social bookmarking buttons for my own blog, and when I saw none was available I made GetSocial. I decided to request donations because I too was curious about the feasibility of donationware, and wanted to investigate the subject. I hate spammy “business models” such as installing Toolbars, embedding ads and so forth and wanted to make software that I would like to use.

Does anyone actually make a donation?

Surprisingly, yes. Many people donate, and I think all of them are glad to do so.

What is the average donation?

At the beginning I was only asking for a fixed amount (5 USD). The reason for this was that a fixed donation simplifies the donation process (because the potential benefactor needs to make one less decision). I’ve selected 5 USD because it was the lowest sum of money for which the PayPal commissions amounted to less than 10% of the donation.

Recently I’ve enabled donations in different currencies and variable amounts (but only on my websites, donations made from inside the application are still fixed). I’ve seen some decline in the ratio of donations per download (although it could be explained by many factors, and cannot be directly attributed to the added complexity of the process without applying proper A/B testing methods). However, the average donation has increased to 9.19 USD, and I’ve also received donations of over 20 USD. This is interesting because 19.99 USD is enough to purchase many commercial software products. To date, no one has donated less than 5 USD.

What is the donation/download ratio?

First of all, please consider that GetSocial is upgraded frequently, and I cannot differentiate between a new download and an upgrade download. Also, I can only count downloads which originated from my own websites. That said, dividing the number of the donations by the total number of documented downloads yields a donate/download ratio of about 0.55 percent (e.g. a single donation is received on average about every 182 downloads).

Can you make any money out of donationware?

I do make some money out of GetSocial, but I’m far from making a living out of it. With the current donation/download ratio, GetSocial will only begin to become economically interesting when it hits the 500k download mark. It’s not impossible market-size wise (there are about 10 million bloggers in WordPress.com) but it’s not easy.

The amount of money one can make with donationware is directly proportional to the number of people involved. For example, in the case of GetSocial, take a million downloads, divide by 182 and multiply by 5 dollars and you have 27k USD (before PayPal commissions). This amount of money can cover the development costs for many small software products.

That said, a million is a big number, even for free software. If you’re thinking about making real money out of a donation based product, I would recommend that you research the size of your market carefully. Getting those million downloads is not an easy task.

I personally don’t think that money is the sole motivation for doing things though. When discussing profits, we should also take into account the indirect benefits I receive from GetSocial such as incoming links, a user base, visits to my website, comments, world fame (or at least some publicity), and even fan mail!

And hey, the donationware model works for Wikipedia, doesn’t it?

Why did you choose a donation model instead of selling licences?

The reason I made GetSocial was that when I started hillelstoler.com (on a WordPress.com platform), I wanted to add social bookmarking buttons for my visitors. When I realized no one was doing that (there was an old text file floating around for manual use) I decided to make GetSocial. I wanted to attract visitors to my new blog, and I knew that distributing a hyped piece of free software would help me build credibility and acquire an international audience. It did.

Why did you choose donationware over freeware?

Out of curiosity, I guess. I wanted to know if one could make any money this way, and if people actually pay when they don’t have to (especially in cases where no one is looking). Today I can clearly say that I was pleasantly surprised. I think that Donationware is a beautiful (and very user-friendly) concept, and I’m glad it’s not just another web myth. Besides, I knew that people needed GetSocial, but to be honest I didn’t really think that anyone would actually pay for such a service at the time. In the end, I think that my potential buyers are also the ones who made the effort and donated, even though they didn’t have to. I’ve actually received some donations larger than what I could possibly charge if GetSocial was a commercial product!

Another important factor in my decision was the fact that I could do it rather easily. Recall the old days, when Donationware DOS programs asked you to kindly snail-mail some cash to a P.O box? That’s the kind of thing I would never bother with, especially when we’re talking about an international market.

Do you think you have made more money through donations than you would have through selling licences?

Absolutely! When I’ve received my first donation I was surprised (so people do donate after all), and as donations kept pouring in I realized that there is a donation culture. Selling licenses also meant becoming a part-time police officer, and that’s not what I was after.

What really amazed me, is that even in this very specific niche of social bookmarking for WordPress.com blogs (where I offer an industry grade solution for free) competition still sprung!

How did you promote GetSocial?

I didn’t. I’ve posted about it on the WordPress.com forums several times, and wrote about it on my website, hillelstoler.com. Other people wrote about it too. No paid ads or anything like that. You’ll notice that I didn’t even include a link on the toolbar itself (the viral ‘Get one!’ link you see everywhere else) because it was important to me not to impose.

You now have a web version of GetSocial. How long did that take to create compared to the desktop version? How do the desktop and web version compare in terms of the amount of use and the amount of donations?

GetSocial Live (the on-line version) started as a weekend project actually. GetSocial is a Windows application, and many people wanted a Mac version. Since I don’t even own a Mac, I decided to make a cross-platform web service (currently, about 40% of GetSocial Live visitors are indeed Mac users). It was easy to make, because I copied some of the code directly from GetSocial. The images are all photos I took of the plants in my house. In the end it did mean additional costs (hosting, domain, etc), but originally it was hosted for free on (the late) Google Pages service.

Later on, I discovered that the on-line version made GetSocial much more flexible and dynamic. I can now post updates much more quickly and effectively. The web version is also much easier to upgrade and maintain because it lacks some of the internal complexity of the GetSocial application (things like self encryption).

Do you get any useful revenue from the Google ads on getsociallive.com ?

As in the case of the donations, I was curious about AdSense. I know for a fact that I never click sponsored links myself, but I guess some other people do because Google makes a living out of it. I didn’t bother with A/B testing and other cash boosters, I just added a single ribbon of ads.

So far revenue has been disappointing (this is also the place to mention that the process of getting my AdSense account approved was very annoying and arbitrary, with zero support). There were some cases where I got more than 1 dollar per click, but I currently get more money through donations than through AdSense. Interestingly, the ratio of ad clicks per page view is similar to (though a bit lower than) the ratio of donations per download.

You can find out more about GetSocial here and GetSocialLive here. Hillel’s blog is here.

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The art, science and ethics of software box shots

Perfect Table planI have recently revamped the PerfectTablePlan payment pages. I asked Andrew Gibson of 3d-box-shot.com to create an image of the PerfectTablePlan packaging, using the existing artwork. I was very impressed with the result. The image is much cleaner and more aesthetically pleasing than I could have achieved by photographing the physical packaging. But I am much less keen on the practice of using box shots of software where is no box (i.e. download only). It seems disingenuous, at best.  Andrew kindly agreed to write a guest article for this blog with an insider’s view on the art, science and ethics of software box shots.

Almost every time the subject of box shots is raised in any sort of software marketing forum, opinion seems to split diametrically in two opposing camps. The first group don’t see any ethical problem with displaying a box shot for a “download only” product. The typical argument used in favour of box shots is that it makes a product appear more tangible to consumers. They can see what you’re selling without having to read about it. It removes any doubt that the site they are looking at has software to sell and, when used effectively, can add an air of professionalism to a site. Finally, there’s a widely held belief that because of this, displaying a box shot can improve conversion rates.

In contrast, the opposing group believe that displaying a box shot for a “download only” product is ethically wrong and fundamentally dishonest. They maintain that customers would complain about not receiving a physical package in the post that’s identical in every respect to the “bogus” box shot displayed on the website. I run my own Micro ISV, selling amongst other applications, a product called 3D Box Shot. As a result, you might be inclined to think that I fall into the first camp. However, I’m actually quite ambivalent about the issue. I use box shots on some of my sites and have never received a single complaint from a customer about them not receiving a physical product in the mail. However, consumers in different markets don’t all behave the same way, which is why advice that works for some ISV’s can be commercial suicide for others. I’m entirely willing to accept that in some markets, some customers may indeed complain about not receiving a physical product. I just haven’t experienced this first-hand.

It’s worth noting that existing users of your product can often be persuaded to purchase additional copies to give as gifts. They may not even make this connection themselves, so why not put the thought in their heads? Send a festive email offering to ship additional physical copies of your products (gift wrapped) to friends and relatives. Add something like the following to your site to make the point visually:

selling-software-as-a-gift

click for a larger image

It’s often stated that adding a box shot to your site can dramatically improve conversion rates for your products. It may come as a surprise to learn that I’m not convinced that this is true in all cases. Generally speaking a box shot isn’t some sort of magic bullet that will transform your sales overnight. However, if it is an integrated part of your marketing strategy then it can make a real difference.

So how do you go about integrating a box shot into your marketing strategy? From a design perspective you can integrate a box design by keeping everything visually consistent. Use your company and product logo on the box and clearly display your website URL as well. This will help to increase the marketing potential of your box shot.

One less obvious method is to add you box shot to the image for your PAD Screenshot. Most download sites are worse than useless when it comes to driving traffic to your site. So instead of thinking of the screenshot referenced in your PAD file as just a screenshot, think of it as a blank advertising canvass that thousand of download sites are happy to display for you free of charge…

PAD-Screenshot-replacement

click for a larger image

Using this method, you can attract visitors to your site even from low quality download sites that don’t even supply a link back to your website.

So how do you get a box shot designed? As a designer I have a fairly unique approach to software box design. I treat a design as a conceptual puzzle than needs to be solved in order to create an effective cover. The criteria I use are simple. Someone needs to be able to look at the box shot and immediately understand what the product is and does. If a box doesn’t meet this challenge, then it isn’t doing it’s job. It’s normally possible to create an effective visual metaphor for a product that explains visually what it’s all about. Here are some examples of the sort of designs I’m talking about:

Example-Designs

click for a larger image

Trends in box design can change. Not so long ago lots of people were asking for Windows Vista Style boxes, but as it became more apparent that Windows Vista was destined to be seen in the same light as Windows ME, this requirement has tailed off. Nowadays the vast majority of design jobs that I do are for DVD cases, both virtual box shots and full print insert designs.

If you’re artistically talented and have access to a good quality image editing tool like Adobe Photoshop and have an easy means of transforming your 2D designs into a 3D Box, then you may well be able to create an effective looking box shot yourself.  However, once you consider the time this takes, hiring a designer seems a lot more reasonable. Since I design boxes commercially, I’ve acquired a lot of design resources including hundreds of royalty free vector images and a library of stock photography. I can draw on these resources when I’m creating a box design. This lets me develop designs quickly through the draft stage through towards the final design. However, as an experience box designer, I still find it challenging and rewarding work. But it is very time consuming.

If you’re determined to “do it yourself” then bear the following points in mind:

  1. The box shot needs to visually show what your product is and does. Show your design to someone that’s never seen your product and ask them to tell you what your product does. If they can’t do this, then your design isn’t up to the job.
  2. Make sure your website address is clearly visible on the box shot. If you ship a physical package you’ll have no way of controlling where it ends up. The box itself can drive traffic to your website. You don’t have to slap it on the front of the box, just make sure it’s there and can be seen.
  3. Try to design a cover that fits with the look and feel of your website. Use the same (or at least, non conflicting) colour scheme as your site and try to use the same fonts. This will prevent your box shot from standing out on your site like a sore thumb.
  4. Never use more than three different fonts in your design. Unless you are selling a font management application, this is sure way to spoil any design.
  5. Design so that text is still visible when the box is reduced to a 250 x 250 thumbnail. If the text is legible at this size on your design, then unless the design carries the message all by itself, the box won’t work very well as a marketing tool.
Perfect-Tableplan white background

click for a larger image

The image above was created in a rendering application at very high resolution. It took around 6 hours to complete on a dual core system. The resulting image is big enough to be used in print ads, or can easily be resized for use on the web.

Andrew Gibson is the head developer and lead designer for www.3d-box-shot.com, provider of box shots, packaging design, e-book covers and more. Box shot images from scratch start at $100. Box shots images from existing artwork can be created for as little as $25. All the images in this article were created by them. The original PerfectTablePlan packaging was designed by Nicola and Adrian Metcalfe.

7 Ways to be a healthier programmer

Developing software is an indoor job with no heavy lifting. How dangerous can it be? Actually, the long term dangers to your health are all too real. Humans have bodies evolved for running around the African savanna, not sitting motionless in front of a computer for hours at a time. I have heard several stories of developer careers cut short by RSI. Imagine if you couldn’t type any more, because it was too painful? Yes, it could happen to you. I started to write an article about ergonomics for developers. Then I realised I knew someone who was a lot more knowledgeable about it than me. Derek kindly agreed to write it instead.

It may seem hard to believe that working at your desk can cause you long term harm, but unfortunately the real toll of sitting in the same location and doing the same operations over and over again may not be felt until it is too late.  Here are some simple precautions you can take.

1. Setup your work environment to be ergonomic

Make sure that your whole working environment is set up correctly. This includes your monitor, keyboard, mouse, your desk height, your chair, and possibly a foot rest. Adjusting your seating position relative to your workstation layout encourages good posture. Do this on a regular basis, not just when the ergonomic assessment forms come around once a year. Setting up your chair correctly is probably the most important step and is covered in detail at healthycomputing.com.

2. Try using an ergonomic mouse and keyboard

There are a wide range of ergonomic mice available nowadays, and while some of them may look a little strange, you may be surprised how comfortable they are compared to conventional mice. The Evoluent VerticalMouse is ergonomic, easy to use and available in left and right hand variants. If you find an ergonomic keyboard inconvenient for programming, consider looking into one with a small key travel distance, like the keyboards on laptops where the keys only need to be depressed a small amount, as this reduces the finger movements and effort required.

3. Remember to look up from your monitor

Staring at your computer screen for long periods will lead to eye strain, tiredness, headaches and dry eyes. Every few minutes, look up from your monitor and focus on objects in the distance, either by looking out of the window or at the most distant end of the room. You can do this by using ScreenRest set to remind you at fixed time intervals. It is also worth adjusting your monitor screen to eliminate reflections from light sources behind and above you.

4. Sit up and stop slouching

Leaning forward, sinking down in your chair or resting you elbows on the desk places unnecessary pressure on your back. Poor posture, maintained over a period of time, leads to back pain and more serious back conditions. Make sure that you regularly correct your posture, sitting slightly reclined and supported in your chair with your shoulders relaxed.

5. Keep yourself hydrated

Don’t forget to keep up your fluid levels throughout the day. Even mild dehydration can leave you feeling lightheaded or bring on a headache. Often when you feel hungry it is actually that you’re thirsty, so don’t reach for the biscuits, get a glass of water first. Staying hydrated will help keep you clearheaded, more alert and help counter the dry environment around computers.

6. Take regular rest breaks

Get up and walk around regularly, taking a few minutes to relax. Try to avoid the temptation of carrying on with that feature that is “nearly finished”, or doggedly tracking down that bug that you’ve “almost fixed”. Taking a break will refresh you both physically and mentally. Also, use the break as a reminder to change the type of task you’re performing. If you use the keyboard and mouse extensively, you may want to use ScreenRest set to remind you based on the amount of usage. It can be surprising how much you use a computer continuously without realizing.

7. Look after yourself before it is too late

As a programmer your livelihood depends on you being able to use a computer. Pay attention to any discomfort, tension or pain you may feel while using the computer. Don’t think that computer-related conditions won’t happen to you and ignore those nagging pains until they become something more serious.

Do not underestimate how severe and uncomfortable repetitive strain injury pains can become and how long they will persist throughout the day and even into the night and will eventually impact leisure activities you enjoy doing. Once the damage has been done even the simplest of movements, not just using the computer, can be enough to trigger pain.  There are tools available, such as speech recognition software, to help with basic computer tasks such as emails and browsing basic websites, but it is of no use when controlling complex development IDEs.  Speech recognition can frustrating to control at the best of times and is impractical in an open plan office environment, due to the background noise.

Derek Pollard

Derek Pollard is the developer of ergonomics software ScreenRest, for the prevention and relief of eye strain and the management of RSI while using your computer.

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“Think you can’t get a virus by visiting a web page? Think again!”

Are you just one click away from disaster? The following post on ASP forums woke me out of my complacency (reproduced with the author’s kind permission):

It happened to me today with FireFox 3.

While searching Google for some information on a movie I watched recently (wasting time, more or less), I clicked on a link that I thought was to IMDB. I only glanced at it in the Google search results before I clicked on it. As soon as the page loaded the browser closed, my desktop background was changed and some sort of fake scanner window showed up. Then I saw desktop icons appear. Then a BSOD, or so I thought.

It turns out it was a pretty common piece of malware called Smitfraud combined with a fake AV malware software called “AntiVirus XP 2008”. They kept asking me to register the software in order to clean the 2700+ virus that it found during its “scan”. The BSOD was a cleverly designed screen saver, I assume designed to make a user reboot without trying any real scanner software.

Luckily I use Acronis TrueImage to do incremental backups every night so restoring to what I had at 4AM this morning only took about an hour but it really woke me up. I had disabled the Avast resident scanner a few days ago thinking that I didn’t need it – I mean, I don’t download random EXE files from the net, I don’t visit “bad” sites and I don’t use any p2p file sharing network so I’m safe – right? WRONG! Talk about a humbling experience. Here I am, an uber nerd, and I just had my entire system hosed in about 4 seconds by visiting a website. If I weren’t obsessed with backups and redundancy I could have lost the source code to all of my software or worse, allowed some cracker kid to install a rootkit and gain access to my desktop on demand. Talk about a nightmare!

I can only assume I ran into a site exploiting some new QuickTime or Flash vulnerability. I definitely didn’t download and run anything from the website – I only clicked the link from Google.

If I could remember the site I would try to return to it in a VM with an anti-virus software enabled to see if it could catch it before bad things happened. I can only hope that my huge mistake of not turning my AV software’s resident scanner was the main thing that allowed the software to be installed.

I’ve since started using OpenDNS.org, set Acronis to do incremental updates twice a day, enabled Avast’s resident scanner and installed the Teatimer program from Spybot Search & Destroy. Oh, and I uninstalled Flash and QuickTime just in case (though I checked and I had the most recent versions of both!).

Mitchell Vincent, www.ksoftware.net

The responses included several suggestions to use the ‘Noscript’ add-on for FireFox. I have been trying it for a few days. It is slightly annoying to keep on having to OK scripts on trusted sites. But that seems a price worth paying. And don’t forget to do your back-ups.

The joys and challenges of running a nomadic software company

la digue island,seychellesIn theory an Internet based software business isn’t tied to any particular geographical location and can be run from a laptop anywhere there is an Internet connection. So why not travel the world, financed by your business? Trygve & Karen Inda are doing just that. They kindly agreed to write this guest post discussing the practicalities of running a nomadic software company.

The freedom to wander aimlessly around the planet, visiting whichever countries you want, is something many people dream about. We have actually achieved it through our microISV. For the past six years, we have been living and working in numerous countries, with nothing more than our Mac laptops, backpacks, assorted cables and adaptors and an insatiable thirst for adventure.

We were thirty years old, with no kids and no debt, working steady jobs in Reno, Nevada, and had a small microISV on the side. It was a “nights and weekends” business that earned us dining out money, or even covered the rent in a good month. After September 11th, my husband Trygve’s day-job slowly went away, giving him more time to devote to our microISV. By March 2002, when we first released EarthDesk, the microISV had become his full-time job.

The response to EarthDesk was phenomenal and we soon realized that we could move overseas, bringing our microISV with us. Within several months, we had sold the bulk of our possessions, moved out of our apartment in Reno and purchased one-way tickets to Tbilisi, Republic of Georgia.

The experiment begins

For six months, we tried to manage our software business while teaching English and doing odd jobs for NGOs, newspapers and radio stations. We had brought with us two Mac laptops (a PowerBook G4 and an iBook G3), which were both maxed out as far as hard drive and memory were concerned, an extra battery for the G4, an external keyboard, a digital camera, and various cables and worldwide plug adaptors. We had also brought a CD case full of original software discs.

Tbilisi home office

In the end, the multiple infrastructure problems that plague the Republic of Georgia (mostly a serious lack of electricity) proved too much for us to bear. We escaped to Germany, carrying 170 pounds of stuff, including our two laptops, a UPS we had purchased in Tbilisi and a Persian carpet we had bargained for while on Christmas holiday in Dubai.

After a few weeks recovering in Germany, we spent a few months in Prague, Czech Republic. When the cold weather arrived, we flew south and spent eight months travelling around the Indian Ocean, South East Asia and Oceania. Shortly thereafter, we landed a software development contract in Dubai and relocated there, but regularly escape to Prague during the blistering summer months. We currently own a flat in central Prague and have considered buying a flat in Dubai.

Kampala, Uganda

By keeping a small base in one or two countries, we can have a “home”, a decent place to work and a life, while still taking long trips with the backpacks. Running the business from an apartment in the developed world is fairly straightforward. What’s challenging is running the business from a backpack while spending several months on the road.

The essentials

Everyone wants to sit on a beach and work only four hours a day, but the reality is a little different. If you are actually running your business, you’ll spend as much time working on the beach as you would in a cubicle. It’s certainly possible to work only an hour a day for a few weeks, but to develop and grow your business, you will need to spend time actually working, rather than sightseeing. It’s not a permanent holiday, but rather an opportunity for frequent changes of scenery.

As a practical matter, you can only travel with what you can carry and a good backpack with detachable day-pack is the only serious option. Since you are carrying a few thousand dollars worth of equipment, security becomes an issue, especially in poorly developed parts of the world. We generally stay in the least expensive hotels we can find that have adequate security and cleanliness, while occasionally splurging on something nicer to maintain our sanity. It is very important to budget properly for long trips. For some people this may be as much as $200/day, and for others it may be only $50/day, but managing expenditures is even more important when on the road. Of course you’ll soon realize that for the same money spent during 4 days in London, you could spend weeks in South East Asia or poorer parts of the Middle East.

On journeys of a month or more, we generally bring two up-to-date Mac laptops (currently 15″ and 17″ MacBook Pros), worldwide plug adaptors, software CDs, two iPods (one for backing up data), a digital camera and two unlocked 4-band GSM mobile phones. For longer-term backup we burn a data DVD about once per month and post it home.

Essential software includes Excel, Entourage, Filemaker Pro, Skype, iChat and, of course, the Apple Xcode Developer Tools. Speed Download saved us in Tbilisi because of its ability to resume downloads after our dial-up internet connection dropped the line, which it did every four minutes!

Surprisingly, the best Internet we have found in the developing world was in Phnom Penh. WiFi can often be found at big hotels, but it is more common to connect via Ethernet in a cafe, where a basic knowledge of Windows networking will allow you to configure your laptop to match the existing settings of the cafe’s PC. In the least developed countries, modems are still the norm.

Kigali, Rwanda

One important consideration, especially in countries where censorship is common, is that many places require you to use their SMTP server for outgoing mail. This may not work with your domain as a return address. To get around this, it’s useful to have a VPN, such as witopia.net, and an SMTP server at your domain.

Visas, taxes and other nasty stuff

If you have a western passport, visas usually only become an issue when you want to stay somewhere more than three months. Often, it is possible to do a “visa run,” in which you briefly leave the country and immediately return for another three months. Many countries make it easy to set up a local company, which can allow you to obtain longer-term residency visas, but there is a lot of paperwork involved with this. Staying more than six months as a “tourist” anywhere can be a problem as you’ll almost certainly have to deal with immigration issues.

Hong Kong

Although Dubai has straightforward immigration procedures and is a fabulous place to spend winters, the UAE Government blocks more websites than just about any other country on Earth. Even Skype is blocked because the local telecommunications company doesn’t want any competition. Unless you are able to find a way around the blocks (wink, wink), running any kind of internet business from Dubai will be fraught with difficulty.

Even if you are living in a tax haven, if you are a US Citizen, you can never fully avoid US taxes, although you can take advantage of the Foreign Exclusion. Local taxes aren’t really an issue if you’re just a “tourist” spending a few weeks in a country, but they can become an issue for long-term stays. If you are planning to stay somewhere for more than a couple months, and “settle”, you’ll need to research tax ramifications.

Sana, Yemen

Since we left the US, our taxes have become much more complicated. Fortunately, we found an American tax attorney to handle our annual filings. He lives abroad and therefore understands the Foreign Exclusion and other tax laws regarding expats. For our microISV, payment is handled online by two providers (always have a backup!), and ends up in a company account in America. We use a payroll service to pay our salaries into personal accounts, which we can access by ATM. We also have established a managed office in Nevada to act as our company headquarters and handle mail, voicemail and legal services.

We have no regrets about having left the US for our big adventure. We have truly lived our dream of being able to travel indefinitely, but sometimes it is wearying not knowing which country we will be living in just a few months into the future. Our ultimate goal is to own two properties on two continents so that we can travel between them with just a laptop.

by Karen Inda

photographs by Trygve and Karen Inda

Trygve & Karen Inda are the owners of Xeric Design. Their products include EarthDesk, a screensaver with a difference for Windows and Mac. They were last spotted in Prague.

Selling your software in retail stores (all that glitters is not gold)

Selling your software in retail storesDevelopers often ask in forums how they can get their software into retail. I think a more relevant question is – would you want to? Seeing your software for sale on the shelves of your local store must be a great ego boost. But the realities of selling your software through retail are very different to selling online. In the early days of Perfect Table Plan I talked to some department stores and a publisher about selling through retail. I was quite shocked by how low the margins were, especially compared with the huge margin for online sales. I didn’t think I was going to make enough money to even cover a decent level of support. So I walked away at an early stage of negotiations.

The more I have found out about retail since, the worse it sounds. Running a chain of shops is an expensive business and they are going to want take a very large slice of your cake. The various middlemen are also going to take big slices. Because they can. By the time they have all had their slices there won’t be much left of your original cake. That may be OK if the cake (sales volume) is large enough. But it is certainly not something to enter into lightly. Obviously some companies make very good money selling through retail, but I think these are mostly large companies with large budgets and high volume products. Retail is a lot less attractive for small independents and microISVs such as myself.

But software retail isn’t an area I claim to be knowledgeable about. I just know enough to know that it isn’t for me, at least not for the foreseeable future (never say never). So when I spotted a great post on the ASP forums about selling through retail, I asked the author, Al Harberg, if I could republish it here. I thought it was too useful to be hidden away on a private forum. He graciously agreed. If you decide to pursue retail I hope it will help you to go into it with your eyes open. Over to Al.

In the 24 years that I’ve been writing press releases and sending them to the editors, more than 90 percent of my customers have been offering software applications on a try-before-you-buy basis. In addition, quite a few of them have ventured into the traditional retail distribution channel, boxed their software, and offered it for sale in stores. This is a summary of their retail store experiences.

While the numbers vary greatly, a software arrangement would have revenues split roughly:

  • Retail store – 50 percent
  • Distributor – 10 percent
  • Publisher – 30 to 35 percent
  • Developer – 5 to 10 percent

Retail stores don’t buy software from developers or from publishers. They only buy from distributors.

The developer would be paid by the publisher. In the developer’s contract, the developer’s percentage would be stated as a percentage of the price that the publisher sells the software to the distributor, and not as a percentage of the retail store’s price.

The publishers take most of the risks. They pay the $30,000(US) or so that it currently takes to get a product into the channel. This includes the price of printing and boxing the product, and the price of launching an initial marketing campaign that would convince the other parties that you’re serious about selling your app.

If your software doesn’t sell, the retail stores ship the boxes back to the distributor. The distributor will try to move the boxes to other dealers or value-added resellers (VARs). But if they can’t sell the product, the distributors ship the cartons back to the publisher.

While stores and distributors place their time at risk, they never risk many of their dollars. They don’t pay the publisher a penny until the software is sold to consumers (and, depending upon the stores’ return policies, until the product is permanently sold to consumers – you don’t make any money on software that is returned to the store, even though the box has been opened, and is not in good enough condition to sell again).

The developer gets paid two or three months after the consumer makes the retail purchase. Sometimes longer. Sometimes never. If you’re dealing with a reputable publisher, and they’re dealing with a major distributor, you’ll probably be treated fairly. But most boilerplate contracts have “after expenses” clauses that protect the other guys. You need to hire an attorney to negotiate the contract, or you’re not going to be happy with the results. And your contract should include an up-front payment that covers the publisher’s projection of several months’ income, because this up-front payment might well be the only money that you’re going to ever see from this arrangement.

Retail stores’ greatest asset is their shelf space. They won’t stock a product unless there is demand for it. You can tell them the most convincing story in the world about how your software will set a new paradigm, and be a runaway bestseller. But if the store doesn’t have customers asking for the app, they’re not going to clutter their most precious asset with an unknown program.

It’s a tough market. It’s all about sales. And if there is no demand for your software, you’re not going to get either a distributor or a store interested in stocking your application. These folks are not interested in theoretical demand. They’re interested in the number of people who come into a retail store and ask for the product.

To convince these folks that you’re serious, the software publisher has to show a potential distributor that they have a significant advertising campaign in place that will attract prospects and create demand, and that they have a press release campaign planned that will generate buzz in the computer press.

Many small software developers have found that the retail experience didn’t work for them. They’re back to selling exclusively online. Some have contracted with publishers who sell software primarily or exclusively online. Despite all of the uncertainties of selling software online, wrestling with the retail channel has even more unknowns.

Al Harberg

Al Harberg has been helping software developers write press releases and send them to the editors since 1984. You can visit his website at www.dpdirectory.com.

Credit card fraud

mount seftonFraud can be a very big problem for online software vendors. Fraudsters can easily use throwaway email addresses that can’t be traced back to them (e.g. Hotmail) and IP addresses aren’t difficult to hide. Not only does the vendor lose the payment when the fraud is reported, they also often get hit with a chargeback fee. This is pretty outrageous when you think about it – the credit card companies are charging vendors for the fraudulent transactions that they themselves have failed to detect.

Thankfully I have had relatively few fraudulent transactions in the last 3 years of running my own business. However some more mainstream B2C businesses aren’t as lucky. Below are the experiences of one software vendor I have corresponded with [1]. It makes for scary reading. The vendor wishes to remain anonymous for understandable reasons.

I tracked one of our recent chargeback emails to a forum were they had been openly selling stolen credit card information for $2 each. If you do have a popular product that may be prone to chargebacks then it is a small nightmare unless you have a fraud system in place as there are 1000s of credit card info out there with full contact details. There is not a day goes by that we don’t get at least 3 stolen credit card purchase attempts.

We use WorldPay and they have a quick check on cv2 code and if the country, postal address and postcode match. But almost all of these purchases pass the simple fraud checks. You cannot even rely on IP checking as the fraudsters are pretty smart and use proxies, or even hijack PCs to make purchases from the same country the credit card is issued. PayPal is not quite as serious, but we do still receive quite a few hijacked account purchases also.

WorldPay fraud checking is next to useless. Even the ones they warn on are usually legitimate. They have recently released a new backend, but they have made the problem worse as they seem to warn if the IP address isn’t from the same country. The problem with that is we get a lot of sales that don’t match, from military based in different countries. Our whitelist used to let them go through automatically, but now we have to manually capture the payment.

The number of fraudulent purchases changes depending if you make a new release etc or if your software is hard to find an easy crack. It can be from 1% to 15% depending, as you may have a single user trying to hit you on certain days.

We were forced to make our own fraud checking system. At least we had all the information at hand as we make users sign up to our site before making a purchase and we log all activity from a user, but to get that information we had to lose many thousands of pounds in fees. Since implementing our own fraud check (as fraudsters do tend to use amazingly similar criteria each time) we have reduced it to on average 1-2 a week, which are almost impossible to catch.

I think the level of fraud has to do with the type of users we sell software to. They are the sort of people that know exactly where to find cracks/keygens. Our software does have pretty good protection and online activation, so it is not so easy to get an easy “working” crack/keygen for it. We also have large volume sales over the past few years, so we have more information than most developers would see.

The credit card companies can’t really lose, especially with “no card holder signature” sales. Chargebacks cost on average 15 Euros. I have even contacted the likes of PayPal telling them that sales are fraudulent, and quite a lot of times they do not care.

We get to see all our sales, I would hate to think what is happening at these merchant services like Regsoft etc. How many sales are being refused that may be legitimate? I tried paying a programmer once who accepted payments using Regnow from my PayPal account and they refused it. My account was verified and had been in good standing for many years. It wouldn’t have been so bad but the person I was paying did not have a clue it was refused.

So, if you have a successful consumer product that fraudsters might be interested in, be prepared to expend a significant amount of money and effort dealing with online fraud. And don’t expect the payment processors and credit card companies to give you much help. I guess the credit card companies don’t have much incentive to reduce fraud. As long as they can keep pushing the cost of fraud onto the vendors and the fraudsters don’t bring the whole system down, the credit card companies seem quite happy. Why wouldn’t they be?

[1] I have spliced together the contents of several emails and edited it for continuity and brevity.