* The Business of Software

A former community discussing the business of software, from the smallest shareware operation to Microsoft. A part of Joel on Software.

We're closed, folks!


» Business of Software FAQ
» The Business of Software Conference (held every fall, usually in Boston)
» Forum guidelines (Please read before posting!)


Andy Brice
Successful Software

Doug Nebeker ("Doug")

Jonathan Matthews
Creator of DeepTrawl, CloudTrawl, and LeapDoc

Nicholas Hebb
BreezeTree Software

Bob Walsh
host, Startup Success Podcast author of The Web Startup Success Guide and Micro-ISV: From Vision To Reality

Patrick McKenzie
Bingo Card Creator

The market is too small. What would you do?

Hi there,

2 years ago I quit my job and launched a mISV. I sell a vertical market application. It took me 6 months to make my first sale ($150 at that time). The sales are still very low, and this is caused by two reasons:

1) The market size is really, really small
2) My marketing skills are not very good (yet)

This product won't allow me to make a decent living, no matter how much effort I put in. Entering such a small market is the worst of all marketing mistakes I have ever made. Now there are several ways to go:

1) Abandon the product now, just keep on providing the customer support, learn from mistakes, look for an opportunity, develop a new product.
2) Keep on working on this product until I completely beat the competition (there is some), improve my marketing skills at the same time; look for an opportunity later.

I am 27 years old, married, no kids, no debt, no serious obligations, have some savings. What would you do?

Thank you.
Friday, April 27, 2007
Why would you abandon it? Does it take a lot of your time? Can't you just coast with the current product while you develop something else?
Nick Hebb Send private email
Friday, April 27, 2007
We're in a similiar situation. It took us 2 years from product launch to get the first sale. For the 2 years we've been working on it only part-time though.

Can you please provide your product website? Given the info you've provided I can't give much constructive feedback.

For our product partnerships I believe are the way to go, but this may not be appropriate for what your selling.
Peter Gadzinski Send private email
Friday, April 27, 2007
First/Current Product:
I would try to have it in the background, enhance it on demand, give proper and prompt support to the current customers, do little marketing on that.

Second/Next product:
Start thinking on another product and develop it. I will try to correct all the mistakes I did in the first product - like - do more market analysis/research, will this be a revenue generating space in order for me to live/exist without a pay job etc., If needed, take up some other projects for getting some funds for the current product development...

hope this helps...
madurai machan
Friday, April 27, 2007
1 year to develop..

released in february.. first sale on march 1st..  about 15 or so sales so far.

40$ app..

all I can suggest is for you to post your actual product URL and have us give you actual constructive criticism.

I got there through the help of fellow JOSers.

Its a must..  if ur struggling.

My 1.0 release has lots of bug even with the 15 or so purchases I guess its pretty sucessfully but I'm getting boatloads of errors subbmited daily :) not enough time or nerves to sit down and starting polishing the app just yet..

#1 problem to fix is the website..  please your url and well tell you.  (note:  cyan is not a good color choice :) )

#2 is marketing.  100% of my visitors at the moment are from adwords..  I have not submitted to downlolad sites yet because its not 99% stable yet.. :)  dont want to get bad reviews or lowdownlods.

anyway.. if you'd like some real suggestions post your url.  oh and dont worrie about anyone here stealing your product idea.  I was freaking out about that at first then realised that any comments here are worth more than the rist of someone stealing my idea.. especially when it was a struggling idea.

do you have an adwords account? are you running campaigns?  what market are your targeting that is so small?  maybe you are not seeing all the possible marketing avenues..
Friday, April 27, 2007
Nick: Probably "abandon" was not a correct term. I meant I could continue supporting the product, but stop implementing any new features. That will not take a lot of my time.

madurai machan: The product has reached the point where customers demand very exotic features, because most of the commonly used features are already available.

The question is whether to stop the active development & marketing now or later. I could continue working on this product for awhile, and thus improve my [marketing] skills. Or I could start looking for an opportunity while having the current product "in the background".
Friday, April 27, 2007
YouKnowMe: I am 99.9% sure this is not a problem with my website (I've polished it based on a lot of criticism) or product (it is not so easy to copy because it includes a lot of non-trivial maths). I'd prefer to be anonymous for another reason.

I am running adwords for almost 5 months now, my ads have got ~3400 impressions with an average CTR of 1.9% so far. My competitors have stopped updating their competing products two or more years ago, but they are running adwords as well.

This market is very small and does not seem to have a potential for growth. That's why I am looking into the possibility of developing another product.
Friday, April 27, 2007
It makes sense develop another product if this one is just languishing as badly as you suggest - are you just selling one copy a month or so now? I'm curious about your competition. You say they've stopped development as of 2 years ago. Are there many of them? Do you think they are selling more or less than you? Do their programs have more features and gloss? How much do they charge? Why do customers prefer your program instead of theirs or vice versa? How big is this market realistically?
Meghraj Reddy
Friday, April 27, 2007
My plan has always been to release additional products that both leverage the existing code base and appeal to the same market. For your next product, are either of those an option?

I don't think there's one truth path to success in software. Both high-mix low-volume and low-mix high-volume companies have been successful. It all depends on the overhead (support, marketing, and so forth).

As always, a link would help.
Nick Hebb Send private email
Friday, April 27, 2007
Peter Gadzinski, are you sure your market is small? or is marketing more an issue in your case?

Googling "warehouse scheduling" reveals a plethora of sites and ads which indicates that this is a  market that is well stocked with solutions. How are you differentiating yourself? Your site doesn't tell us why you're different or better than the others.

For the OP: yes tell us your site so we can help more.
Oliver Send private email
Friday, April 27, 2007
was that 3900 so far?

or 3900 daily?

if its not daily.. then you defenately need a new product with a new market.

best way to test the market you want to jump into and evelop is to run an adword campaing on the keywords of your new product/software and direct it to a simple website that has signup for beta release or something to that affect..  main purpose is to see how much traffic you can gain to the website..  whip up a nice GUI for the software to put screenshots on the temporary website untill you actually develop the software.

you can probably do all that within a week.  instead of taking months or years to develope a complete 1.0 software before you test the market.

what do you think of this as a way to test the market?

how long did it take to get the 3900 impressions? (are you sure you have all relavant keywords added?)
Friday, April 27, 2007
Meghraj Reddy: My sales are currently about $1000 a month. That's about 5 sales or so (the product is priced differently for commercial & academic users).

There are 3 direct competitors:

The first product of this kind on the market
Old Windows 3.11 look & feel (doesn't look good)
Last updated in 2004

Windows 95 look & feel (looks better, but not that good)
Last updated in 2001

Provided by a large company
Windows 98-2000 look & feel
Last updated in 2005
A part of the larger product suite (generally works as a complimentary tool, but can be purchased & used separately)

My product:
XP look & feel
Last updated in 2007
Many usability improvements over competitors

As for the features, my product beats the 2nd one, and compares to the rest well. The third company probably has a reason to charge that much because their product provides an Excel integration. I have no clue why the first company charges about $600 for their product.

I can definitely make the very best product on the market. But not sure if that's worth an effort. The market is not big anyway. You can guess how big it is by looking at my adwords related post. The average position of my ads is 2.1.

I don't think my product is underpriced - it looks like those 2 products are overpriced. But this could be an issue though.
Friday, April 27, 2007

you gota get ride of the cyan on the website.

it may be your favorite color but....

give it a little HUE shift.
Friday, April 27, 2007
YouKnowMe: 3400 is not daily, it's so far.

I think using adwords is a good way to test the market. I wish I knew this method 2 years ago.

But you can also affect the market by innovation. Even my so-narrowly-used product provides some innovative features that attracted specific customers who would not buy this kind of software at all if it didn't contain these features.
Friday, April 27, 2007
Nick: Yes, it's possible to release a product based on the existing code base. I have considered this option, and it sounds good, since the market for that product is really big and growing. The only problem is that there is an established leader in this field - the 3rd competing company in my list (see above). So, this new product is going to be a "mee too, less features, less price" kind of software.

Oliver: Sorry won't provide the URL as I shared the sales info :(
Friday, April 27, 2007
I say you are doing great. how long will it take you to write that excel integration? 1 2 3 months ?? more ??

Write it and price on par with the competition.
Friday, April 27, 2007
Why are you pricing so low? Average price is $500, you're at $300.
farmboy Send private email
Friday, April 27, 2007
OK, $1000/month is not so bad. That's some decent income for one niche product. It'll get higher with version 2. I wouldn't rule out adding on to it, but you can also do another product if you'd rather. I was thinking you're only making a sale or two a month, but you're not, so keep with it.
Meghraj Reddy
Friday, April 27, 2007
>Oliver: Sorry won't provide the URL as I shared the sales info :(

microISVer, I understand.

I don't think adwords should be the only measuring stick for a market. Some things sell by word of mouth more than anything. I believe this is especially true in very small markets (where there are "walls for ideas to bouce off of" - Seth Godin analogy). My adwords campaign produces far fewer views than yours but the CTR is 9%, and the conversion to a free trial request from them is about 25%. If you have a higher dollar app, you can get away with very low adwords views, IMO.

What can you tell us about the industry? is it on the up? dwindling? stagnant? If the industry as a whole isn't going down, then $1000/month isn't bad. You've invested a lot of time into it, perseverance may reward you.

Can you put a number on the size of the industry? Meaning, absolute max of potential buyers?

>But you can also affect the market by innovation. Even my >so-narrowly-used product provides some innovative >features that attracted specific customers who would not >buy this kind of software at all if it didn't contain >these features.

Bingo! keep working that aspect, and make sure the website points out these differences very clearly.

Also, do the Excel integration and raise your price. You may be hurting yourself double with the low price (less revenue + less percieved value from the potential buyer)
Oliver Send private email
Friday, April 27, 2007
If you tripled your price you'd be making a very reasonable (depending on your adwords cost) revnue of 36K/year. And you'd still be in the ball park, just a bit more expensive than the most expensive (which you described as being less "modern" looking and less user friendly.

Have you sat down with some of your customers to make sure that you're casting a wide a marketing net as possible?  I.e., perhaps there are search terms that you are missing with Adwords. (The other benefit is the more esoteric (very specific)  search terms (the 'long tail' as they say) are often less expensive to bid on (less competition).

For example: adwords on "wedding" is too broad, too much competition, too costly. "wedding seating plan" is much more specific. But "dinner seating plan" might get you even more clicks at a lower price.

Adwords has suggestions for other keywords, but talk to your CUSTOMERS to get even better ideas. Sometimes they describe thier needs using very non-intuitive keywords. I know from experience.
Mr. Analogy Send private email
Friday, April 27, 2007
The product provides a feature subset of one of the Matlab toolboxes, so Matlab is an indirect competitor.

The difference is that in Matlab, you have to code in built-in scripting language to get the things done, and my product incorporates these features into a visual application. The Matlab itself is very expensive as well, so most people are not likely to purchase it just to use that single feature. This industry is stagnant.

The first version of my product was not feature rich (and priced at $150). I have started getting $1K a month with the third version release (8 months ago).

The current number of users is almost 100, the total sales is ~$12K over the 2 year period.

Mr. Analogy: As I mentioned, I have had some exotic feature requests which are beyond the scope of the product a bit. Basically, they want some things which are also available in Matlab, but not directly related to the main product functionality. Also, I have discovered some search terms overlooked by my competitors, but they don't lead to a lot of impressions as well.

I can implement that Excel integration and some more useful features in 2-3 months. This looks like the last thing I can do trying to get the project from the ground.

Will you guys recommend to release a very-feature-rich version, charge $900 for it, and see how it works?
Saturday, April 28, 2007
This sounds like a marketing problem, not a software problem.  Adding features doesn't automatically broaden the market.  Getting your webpage in front of more people who will want your software does.
Patrick McKenzie Send private email
Saturday, April 28, 2007
Patrick may be right, especially given you wrote this in your OP:

>2) My marketing skills are not very good (yet)

Well, if that's the case, how would it benefit you to abandon product A, spend time finding a new product B, develop product B, and then MARKET product B?

As long as you're a mISV you are going to have to do marketing. Product B will not sell any better than product A if your marketing skills don't get better. So definitely work very hard on your marketing skills. See all of the numerous threads we've had on here about "what can I do to boost my marketing?" and start taking action. Then after you do that for a while you can reevaluate whether Product A is a dud or not.
Oliver Send private email
Saturday, April 28, 2007
Personally, I wouldn't do the Excel integration if that code can't be leveraged into other products.

I don't care how much you improve on marketing. If sales are only $12k over 2 years, then the upside for the current product isn't going to be that great unless you (a) miraculously become a marketing whiz overnight or (b) hire someone who is, which you probably can't afford.

I say raise your price, then cut your loses and move on to the related product. Look at this "highly competitive" market and see where the weaknesses are. The last quote I read on WorkHappy.net makes a lot of sense:

"Don’t ever let anyone tell you that something is too competitive. Once you subtract the people who don’t work very hard, or the people who aren't as good as you, your competition shrinks dramatically."

- Maggie Mason, entrepreneur, author, and founder of Mighty Goods
Nick Hebb Send private email
Saturday, April 28, 2007
Even if your product isn't moving well at the moment, I wouldn't call anything Matlab related a dead market.

1) make your product the best in the niche - you daid that you knew how to do this.
2) lower the price to generate sales of your product
3) add more products to your line so that your overall revenue isn't dependent on a single product
4) Matlab is expensive, and so are similar products in that category - unless you are talking about the academic versions. Start marketing your tools heavily in the academic arena, where people can get exposure that they will carry to employers later.
5) Hire a marketer, because you can't be an expert in everything, and you really need to focus your expertise on your product.
Saturday, April 28, 2007

>Googling "warehouse scheduling" reveals a plethora of sites and ads which indicates that this is a  market that is well stocked with solutions. How are you differentiating yourself? Your site doesn't tell us why you're different or better than the others.

Perhaps your right about the market size. We created the software for warehouses primarily receiving & shipping scheduling. We have been running adwords campaigns for 9 months for these markets and getting very little impressions. I have 12 clicks for Shipping scheduler. We are aiming to broaden the market by going after more niches.

In regards to the google results, most of these products are huge systems with wider scope. Probably starting at $100k and requiring customization. This is a space we don't want to go.
Peter Gadzinski Send private email
Sunday, April 29, 2007

1. Forget AdWords: Ive dumped my account and made all my sales since then, optimizing my web site and choosing affiliates
2. 2 years in development? I wouldnt throw all that work away for anything! Take your original code, think hard, and develop a "sibling" product in a new market
3. Efficiency: You need to remove all your bugs, cleanup and organize your business, and minimize support calls and emails. If you code is so buggy you are spending larghe amounts of time dealing with angry customers, thats bad. The ideal is to have everything, including your shopping cart and email, so effiecient and automated as an mISV that you can be playing golf and check you phone every few hours for new sales! If you build buggy software you are just shooting yoruself in the foot as thats the one variable nothing can fix but you. Its going to cost you valuable hours the next year dealing with that stuff rather than moving forward with a new version of your software, and yes, that will cost you your business in the long run. Buggy software always does!

I would focus on brainstorming the next few months and come up with a creative way to use the same code in a new product and market niche. This way you are efficiently using your time and business. But remove the bugs firs is my advice else youy will have two buggy products.
Sunday, April 29, 2007
Patrick & Oliver: My plan was/is to improve my marketing skills. But many factors I mentioned indicate that this is not the only problem. In the long run, this product is not going to "make me rich", or even allow me to make a decent living. I just feel the return on time investment is quite low, and it might be much higher if I start a new product. What if I am missing a nice opportunity right now?

Nick: I totally agree with you. Doing the Excel integration would help me develop the new related product. My code base is organized with reuse in mind. I should probably do that integration and move on to the next product (the same as ranger suggested), while improving my marketing skills.

Nice quote BTW. Some time ago I read an article "What Are the Odds of Becoming a Black Belt?" by Steve Pavlina which says almost the same thing.

*myName: If I make my product the best in the niche, why should I lower the price? I guess I would have to raise it to reflect the relative product position. And yes, academic sales represent a significant % of all sales.

Hiring a marketer for this product is not going to pay off. Furthermore, improving the marketing skills is probably one of the best long term investments mISVer like me can make.

ranger: Why forget adwords, while my competitors don't?
Sunday, April 29, 2007
"the market size is really, really small"

Is it possible to broaden the appeal of your product to make it bigger?
Duncan Send private email
Sunday, April 29, 2007
Duncan: Yes, but not much bigger - this could only be done by introducing some specific features competing products have.
Sunday, April 29, 2007
>I just feel the return on time investment is quite low, and it might be much higher if I start a new product. What if I am missing a nice opportunity right now?

If you feel strongly in that direction the next question is: has your search for a new product idea been successful? Have you found any ideas that clearly beat your old idea in terms of profit? Good ideas are hard to find. And just about every idea is going to require a tremendous amount of hard work and time bfore they make you rich (if ever).

Peter: I would rather not hijack microISVer's thread any further (and yes it's my fault for starting). I would like to continue talking about your company, but may I suggest you start a new thread for your issues? As you can see many here are happy to help in any way they can.
Oliver Send private email
Sunday, April 29, 2007
FYI: Ian Landsman's comment re this thred:

Oliver Send private email
Sunday, April 29, 2007
Oliver: I have not started the search in that direction yet. I am currently trying to understand if that would be a correct way to go right now, or I should do my marketing homework AND keep on working on the current product for awhile (or maybe for a long time - if there is no market too small).

Thanks for the URL - that's a very interesting thread.

@All: I appreciate your help & patience.
Sunday, April 29, 2007

This topic is archived. No further replies will be accepted.

Other recent topics Other recent topics
Powered by FogBugz