Tag Archives: software

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Choosing a market for your software

The efficient market hypothesis states that “asset prices fully reflect all available information”. If the efficient market hypothesis is true, then you would expect actively managed funds (where fund managers pick the stocks) to do no better than index funds. That does seem to be the case:

“Numerous studies have shown that index funds, with their low costs and ability to closely mimic the returns of markets both broad and narrow, steadily outperform the returns of most actively managed funds.” Wall Street Journal

Unless you have some sort of insider knowledge (which it might be illegal to exploit), you might as well invest in index funds or get your cat to pick your stocks as pay someone else to do it.

But I am interested in a different sort of market efficiency. If you have to pick a vertical market to start a software business in, does it matter which vertical market you pick? If the market is perfectly efficient for businesses, then each vertical will have a level of competition proportional to the size of the market. In that case you should have an equal chance of success whether you decide to write a game, a developer tool, an anti-virus product or a CRM system.

From lots of reading and talking to other software business owners I have come to the conclusion that the market is highly inefficient for businesses. The market vertical you pick has a big effect on your chances of success. It seems to me that the three worst verticals are: games, developer tools and consumer mobile apps.

Games are fun! Writing a game sounds like a blast. Much more exciting than writing software for boring businesses. It has also been getting easier to write games due to the ever improving tools. Consequently, the market for games is totally saturated. The outlook for independent games developers looks grim. Today on the Steam platform there are 12,971 games listed. Even some of the big and famous games developers only seem to survive by forcing their staff to work vast amounts of unpaid overtime.

Pretty much every software entrepreneur has considered creating a software development tool at some point. I know I have. It is a market that we all understand (or think we do). But consequently it is saturated. Software developers are also pretty horrible customers. They are used to using lots of free software. And that tool you spent years developing? They think they can write something better over a weekend.

“Thousands of people used RethinkDB, often in business contexts, but most were willing to pay less for the lifetime of usage than the price of a single Starbucks coffee (which is to say, they weren’t willing to pay anything at all). … Developers love building developer tools, often for free. So while there is massive demand, the supply vastly outstrips it. This drives the number of alternatives up, and the prices down to zero.” Why RethinkDB failed

I wrote back in 2010 what a horrible market the iPhone app store is for developers. Since then the number of apps has increased tenfold to 2.2 million, the average paid app price is a measly $1.01 ($0.48 for games) and some 90%+ of apps are free or freemium.

You should be wary of markets with no competition. But the really high levels of competition in these three markets drives down prices and makes it very hard to get noticed. Obviously not everyone in these 3 markets is failing. It is possible to create a product in one of these markets and be wildly successful (Indie game developer Notch of Minecraft fame springs to mind). But I think the odds are very much stacked against you.

So what market should you pick to maximize your chances of commercial success? Aside from the obvious factors (e.g. something you are interested in and knowledgeable about, something that solves a real problem etc) I suggest avoiding anything considered ‘sexy’ by other developers.

Here is a radical idea – create a software product aimed at women. The vast majority of software is written by men and consequently it tends to cater for men. 50% of the world’s population are women and they buy software too!

Just because a product is not in a ‘sexy’ market doesn’t mean that it has to be boring to create. I have found plenty of interesting usability, optimization and visualization problems to solve while developing my own seating planning and visual planning software products.

Here is a thought experiment. Imagine you are talking to another software guy at a conference and explaining what you product does. If your imaginary software guy says “that sounds cool”, then it’s probably a tough market to create a commercial product in. But if they look a bit surprised or their eyes glaze over, then you might be on to something.

Giving a shit

Sturgeon’s law states that “90% of everything is crap”. He was probably an optimist. Here are some recent examples of the sort of crap I come across day to day:

The school selection website

My wife and I had to select which secondary school we want out son to go to, an important decision for our family. We had to do this via a website created on behalf of Swindon council. I won’t bore you with all the painful details, but only an impressive combination of incompetence and apathy could have produced something so egregiously awful. At the end of the process we got an error message and the promised confirmation email never arrived. We were left feeling confused and angry. Every other parent we spoke to had a similar experience.

The ATM

Feast your eyes on my local ATM:

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Yes, that’s right, the buttons aren’t correctly aligned with the screen, so they have added some shonky visual cues in a feeble attempt to compensate for it. They failed – I have pressed the wrong button more than once. If they couldn’t move the buttons, why didn’t they just change the text positions in the software? I would like to know what sort of horrific set of bad decisions and sloppy planning led to this laughably bad design.

The in-flight meal

Check out this British Airways in-flight meal I was served:

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Behold, the cutlery is in a sealed plastic bag in the pasta. To get at your cutlery you have to open a slippery plastic bag covered in sauce with your fingers, which are now also covered in sauce. Who could have possibly have thought this was a good experience? You might as well just eat the pasta with your fingers. Or stick your face in the plate. Maybe the subliminal message is: if you won’t pay for business class we are going to make you eat like an animal.


You don’t have to look very hard to find crappy design. Badly designed parking buildings, confusing ticket machines, painful to use Sat Navs, packaging that is almost impossible to open, web forms that won’t let you use a space or a dash in a telephone number. I could go on, but I’m sure you could come up with plenty of examples from your own life. The most frustrating thing is that these issues could have been avoided with a little bit of thought and care. I doubt it would have added more than an extra 1% more effort or cost to get them right.

Crappy products and services make everyone’s life worse. Hold yourself to a higher standard. Take pride in your work. Do usability tests. Get feedback from your users. Fix things that are broken. Keep improving. Above all, give a shit.

sales sites and bundles

Promoting your software through 1-day sales and bundles

Hyper Plan, my visual planning software for Windows and Mac, has now been for sale for a bit less than 2 years. Given that I am (by choice) doing all the development, marketing and support for both Hyper Plan and my other product, PerfectTablePlan, I have had a limited amount of time to promote Hyper Plan. But Hyper Plan is in a  competitive market, where it is hard to get noticed using traditional promotional techniques such as SEO and PPC. So I have been experimenting with promotion via 1-day sales sites and bundles.

I did several promotions through both bitsdujour.com and macupdate.com promo. These were 50%-off sales for 1 day (sometimes extended for another day). The site takes 50% commission on the sale, so I only got $10 of my normal $40 ticket price. But I also got exposure to a whole new audience I wouldn’t normally reach.

I also included Hyper Plan in bundlehunt.com and macupdate.com software bundles. In these bundles customers purchased some 10 items of software at a big discount. The promotions lasted for a few weeks each. I am not at liberty to divulge how much I got for each licence, but a quick calculation based on the price of the bundles and the number of items in the bundle tells you that it was a lot less than $10!

My hopes related to sales sites and bundles were:

  1. A worthwhile amount additional sales revenue.
  2. Increased feedback, giving me more insight for improving the product.
  3. Making money further down the line from major upgrades (e.g. v1 to v2).
  4. That I wouldn’t be swamped in support emails from people who were paying me a lot less than the standard price.
  5. More word-of-mouth sales after the discount has finished.

On analysing the results, the first 4 turned out to be true.

I had previously tried promoting my PerfectTablePlan table planning software on bitsdujour.com, but the results were disappointing. It just wasn’t a good match for their audience. However Hyper Plan is a more general tool and it did a lot better. The bundles also sold in impressive volumes. The source of Hyper Plan sales revenues to date after commission (but not including upgrades) is show below.

sales-revenue-source

So the extra sales were certainly significant from a revenue point of view, bearing in mind that Hyper Plan is a relatively young and unknown product.

I also got some very useful feedback from the bitsdujour comments section.

I released v2 of Hyper Plan in March 2016. I have crunched the numbers to see how many v1 customers to date have paid for upgrades to v2.

percentage upgrades

I expected that the 1-day sale customers who had paid $20 for the initial licence would be less likely to pay $16 to upgrade to v2 than those who had hadn’t purchased at a heavy discount. I was surprised that the opposite turned out to be true. I don’t have a good theory why.

I don’t have any figures for bundle customer upgrades, as the bundles happened after v2 was released. Given that bundle purchasers probably only wanted a subset of the software in the bundle, I expect the upgrade percentages to be a lot lower than above.

I wasn’t swamped in support emails. In fact things were surprisingly quiet during the bundles, which makes me wonder how many people who purchased the bundle were interested in Hyper Plan.

There were no sustained jumps in traffic or sales after the 1-day sales or bundles ended.

Best of all, the 1-day sales and bundles don’t cost anything, apart from a modest amount of time to set-up.

I know some vendors promote these 1-day sales and bundles to existing customers. But I don’t understand why you would do that. The whole point of these channels is to reach new audiences. Also you risk annoying customers who have paid list price. If you already have an audience you can promote a sale to, then you don’t need 1-day sales sites or bundles. Just email them a discount voucher.

I had one complaint from an existing customer on a forum who had paid full price and then saw Hyper Plan in a 1-day sale. I offered to refund the difference back to them, but they didn’t take me up on it.

In conclusion, the sales and bundle sites brought in useful spikes of additional sales (especially when you include upgrades later on) and feedback, without a big jump in support burden. But they didn’t lead to a noticeable long-term increase in traffic or sales. Obviously every product is different. But if you have a product that needs exposure, isn’t too niche and doesn’t require a lot of support, it may be worth giving 1-day sales and bundles a try.

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How to make difficult decisions

When you run a business (even a small business like mine) you have to make a lot of decisions. Many of these decisions are complicated and have to be taken with incomplete information. But you can’t take too long over them, or you will never get anything done. Here are 3 techniques I use to help with difficult decisions.

Break it down

This is a very simple method for breaking a difficult decision down into smaller parts using a spreadsheet.

  • Decide the criteria that are important for the decision. Add a row for each.
  • Add a weighting column. Assign each criteria a weighting in the range 1 to 10, depending on its relative importance to you.
  • Add a column for each option you are considering.
  • Set each criterion/option cell a value in the range 0 to 10, depending on the extent to which the choice for that column fulfils the criteria for that row.
  • Calculate the weighted sum for each column.
  • Choose the outcome with the highest weighted sum.

Here is an example for choosing between 3 different types of hosting:

making difficult decisions

It’s not particularly scientific, but it does force you to systematically break down the problem into smaller parts and justify your decision.

Take the long view

It sometimes helps to stand back and look at the bigger picture. I can think of no better way to do that than to ask a hypothetical (hopefully elderly) future me, lying on my deathbed, which option they approve of. For example, given the choice between adding an innovative new feature to my product or improving the conversion funnel by a few percent, I think future me would be happier that I chose to add the innovative new feature. It is also a useful reminder that many decisions probably aren’t all that important in the grand scheme of things.

Flip a coin

Sometimes you need to make a decision, but you don’t have enough information or the time taken to get that information is going to cost you more than making the wrong decision. In that case, don’t agonise over it. Just roll a dice or flip a coin and move on.

Hammer For Mac static website generator

I prefer static websites to a CMS for simple product websites because:

  • Static websites are fast.
  • I have more low-level control over the HTML/CSS.
  • I don’t have to worry about the very-real threat of a CMS being hacked.

Obviously writing every page separately in raw HTML/CSS would go against one of the cardinal rules of development, Don’t Repeat Yourself. But you can avoid this using a static website generator such as Hammer for Mac.

hammer

Hammer uses a simple syntax embedded in HTML comments to ‘compile’ a website from source files. I have now used Hammer to create several static HTML/CSS websites, including my perfecttableplan.com and hyperplan.com websites.

I like the simple syntax of Hammer. For example:

I can put the HTML for a page header in an _header.html file and then each page just needs to start with:

<!-- @include _header.html -->

I can define and use variables:

<!-- $current_year 2016 -->
..
<p>Copyright <!-- $current_year -->.</p>

And I can let Hammer work out relative paths:

<img src="@path image.png" />

If Hammer can’t make sense of a source file (e.g. it can’t find the image file), it generates a compilation error.

Because everything is text based I can easily manage all the source in a version control system. Also, if I have to move away from Hammer, it should be relatively straightforward to change the syntax to another static generator (or even write a replacement for Hammer!).

Overall I like Hammer. But it does have a number of shortcomings:

1. The user interface is very limited. Hammer shows you a list of source files and you can click on a source file to see the compiled version or edit the source. But the source files are listed in the order they were edited and you can’t filter or sort the list. This seems such a simple and basic feature, that I can’t understand why the developers have omitted it.

2. Hammer takes a dumb, brute force approach to compilation. If you change any file in a source folder, it recompiles *everything*, without checking if other source files include that file. This is a pain if you have 100+ source files. Surely it wouldn’t be that hard to work out which files depend on which and only recompile the files that need recompiling?

3. You can’t nest variables. For example you can’t do this:

<!-- $current_year 2016 -->
<!-- $copyright_message Copyright <!-- $current_year --> -->

This might sound minor. But it limits the expressiveness of variables significantly.

4. The vendor doesn’t do email support. If you want to communicate with them you have to use Slack or Twitter. I am old fashioned, I like email.

5. It only runs on Mac OS X (the clue is in the name).

At one point Hammer looked like abandonware, but owner riothq.com sold it to beach.io and active development has resumed.

Currently Hammer is priced at £15.39 (and presumably some round number of US dollars). That seems way too cheap. I wish they would price it a bit higher and fix some of the issues above.

 

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Updating the PerfectTablePlan website

I created the website for PerfectTablePlan back in 2005, using a dreadfully buggy piece of software called NetObjects Fusion (NOF). The sorry story of why I ended up using NOF is told here.

Until recently the front page looked like this.

old-website-design

I had done a fair amount of A/B test tweaking and it converted visitors to downloads and sales relatively well compared to other downloadable product websites. But it had that ‘designed by a programmer’ look and it wasn’t responsive, so it didn’t work on well on mobile devices. My software only runs on Windows and Mac, but I still want to appear in mobile searches. The HTML generated by NOF was also pretty horrible. Frankly, I was a bit embarrassed by it when I looked at websites for other products. I kept on meaning to update it, but there was always something more urgent or (to be honest) more interesting to do. I finally bit the bullet and had it redesigned in 2015. The front page now looks like this:

new-website-design

The process was:

  1. I wrote a specification for the new design.
  2. I ran a 99Designs.com competition to design a new home page based on the spec.
  3. I selected the winning designer and paid them to design 3 additional pages in the same style.
  4. I paid pixelcrayons.com to code up the 4 pages in responsive CSS/HTML.
  5. I poured all the old content into the new design. Being careful to maintain the existing page names, titles, text and images etc, so as not to lose existing organic traffic.

The whole process didn’t cost a great deal (somewhere around $2k), but it took quite a lot of my time, spread over 5 months. Especially the final step. This wasn’t helped by the size (some 128 pages were converted) and general cruftiness of the old website, and my lack of knowledge of CSS and responsive design.

I didn’t want to be locked in to a CMS, so I used Mac static website generator Hammer4Mac to generate the HTML. It goes without saying that I wrote a program to help me pull all the content out of the old website and into Hammer4Mac! While Hammer4Mac isn’t without flaws, I found it a vast improvement over NOF and the new website is now much easier to update and maintain than the old one.

The new website went live on 16-Dec-2015.

So how much difference did the redesign make? Here are the changes based on comparing 25 weeks of data before the change and 25 weeks of data after the change:

bounce rate +1.5%
time on page +16.0%
traffic +6.5%
        desktop traffic -2.2%
        mobile & tablet traffic +40.0%
completed installs +1.4%
sales transactions +11.4%
total sales value +21.8%
visit to sale conversion ratio +4.6%
average order value +9.4%

The increase in mobile traffic as a proportion of total traffic is pretty clear from analytics (the dip in December is seasonal):

traffic

I believe  a 21.8% improvement in sales is a lot more than I would have got by spending the same amount of time and money improving the product itself, which is pretty mature after 11 years of work.

Overall it looks pretty positive. But, as analytics data is fairly dirty (e.g. due to analytics spam) and I didn’t run a split test, I can’t definitely say that the changes above were due to the website changes. I wasn’t able to compare all the above data with the same time period for the previous year due to some missing analytics data. But the sales data for 25 weeks before and after 16-Dec in the previous year was:

sales transactions -9.9%
total sales value -2.7%
average order value +8.1%

Which implies that the sales changes are unlikely to be due to seasonal factors.

Best of all, I never have to use NetObjects Fusion again!

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Things you don’t need for v1.0

Few people launch software products expecting them to fail. But many products do fail. I don’t have any figures, but I think I can fairly confidently state that more commercial software products fail than succeed. You think your product isn’t going to be one of the failures. But so does everyone else. The only way to find out for sure is to launch. The sooner you launch, the sooner you will find out. I have banged the drum for releasing early before, so I won’t labour it here. But it begs the question – how do I launch fast? What do I leave out? Based on my experiences of launching 3 software products, this is what I would leave out.

Polish

As developers we (hopefully) all want to do great work that we can feel proud of. But, as entrepreneurs, we need to be careful not to spend lots of time polishing something that might be a turd. So ship v1.0 before it is polished. Early adopters tend to be fairly forgiving of a few rough edges, if they are interested in the direction you are taking. I spent 6 months (part-time) working on the first version of my AdWords keyword tool. It flopped. So I shipped the first version of my visual planning software within a few weeks of writing the first line of code. It was pretty bare-bones and a bit slow for plans with hundreds of cards, but it was enough to demonstrate the basic concept.

Designer website

You don’t need a beautiful, state-of-the-art website to launch your product. My own table planner software had a pretty ropey website  (designed by me) for the first 10 years and it did fine. Just make sure the website clearly conveys what your product does.

Logo

You don’t need a professional logo for v1.0. The product name in coloured text using a font other than Arial will probably be fine. I did the initial logo for Hyper Plan in Microsoft Word Art in 10 minutes. Here it is in all it’s glory:

old Hyper Plan logo

I only paid a designer to come up with something better once I was sure it was worth my while.

DRM/Payment processing

I shipped the first version of Hyper Plan without even setting up licensing or payment processing. Every time you ran it, it just put up a window saying that it would expire on a certain date and that a new release would be available by that date. After that date it just stopped working.

Hyper Plan expired window

I only added licensing and payment processing once I had proved enough people were interested in the concept to make it worth my while. If you are going to take this approach, make sure you let people know that they will be expected to pay at some point.

Sophisticated pricing model

Ideally you want to segment your customers so you can charge more for the people who are prepared to pay more. But you probably don’t understand your market well enough to do this when you are starting out. So just pick a single price. I introduced segmented pricing for PerfectTablePlan in v4. Hyper Plan still has a single price.

Feature parity with your competitors

Trying to achieve feature parity with established competitors in v1.0 is a fool’s errand. Just pick one pain point that you think is not being well addressed and try to solve that. Make your lack of features a selling point by emphasizing how simple your product is to use.

Multi Platform

If it is going to take significant additional effort to release multi-platform, then just pick one platform to launch v1.0 on.

Extensive documentation

The first version of your product should be simple enough and well enough designed that it doesn’t need extensive documentation. My Hyper Plan software has been out for a year and it still only has a one page quick start guide.

Mailing list

Many people advocate building up a mailing list of interested people before you launch. It obviously helps a lot if you already have an audience in the market you are launching into. But, if you don’t, it takes significant time and effort to build that audience. I would rather put in that effort once I have something to show them.

Trademark

Why bother to spend time and money trademarking something if you don’t even know if anyone wants it?

Patent

I’m not a fan of software patents and I don’t have any patents after nearly 11 years in business. So I certainly wouldn’t waste time and money on a patent for v1.0.

Lawyers

If a bug in your software could kill someone or destroy their business, you should probably talk to a lawyer. Otherwise a boiler-plate end user licence agreement is probably fine for v1.0.

Company

I did create a limited company before I launched my first product to get a bit of extra legal protection. But its not strictly necessary (in the UK at least).

Trade-offs

It’s all a tradeoff. Obviously it is better to have a beautiful website than an ugly one. But is it worth spending lots of time and money on designing a beautiful website for an unproven product?

The best approach depends very much on your market and circumstances. If you are a big player with lots of money and reputation, then much of the above may not apply. If you are selling web design products, you had better have a pretty slick looking website for v1.0. If you are selling aircraft avionics systems then I hope v1.0 of your product is pretty polished.