* The Business of Software

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

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Movie:

"Make Better Software" is a 6 movie course designed to help you as you grow from a micro-ISV to a large software company.
Part 1: Recruiting
Part 2: Team Members
Part 3: Environment
Part 4: Schedules
Part 5: Lifecycle
Part 6: Design

Moderators:

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

2007 in review

Hideho everybody.  Every year, somebody posts the inevitable "So, how'd you all do?" question, and it is always an enormously popular topic.  I thought I would start the ball rolling this year.

Feel free to comment anonymously and say as much or as little as you're comfortable with

Sales: 405 units = ~$10.5k ($10315 + ~$200 worth of orders in foreign currencies).  Might be a bit higher depending on whether a promised purchase order makes it here by the end of the year or not.  (Somebody dangled enough money in front of me that I decided to figure out how to process them ;).  300% increase over 2006.  Hit my target for the year.

Expenses: 2.5~3k .  $1,725 on AdWords and the rest is, for the moment, an estimate from memory.  My second biggest expense was freelance writers for Daily Bingo Cards.

Profits: ~7.5k-8k.  About a sixfold increase over last year.

Best New Idea As Of Today: Conversion Optimizer.  My big New Years news is that Google thought I was successful enough on that to warrant a case study.

Best New Idea As Of Whenever It Takes Off: Daily Bingo Cards (http://www.dailybingocards.com).  I have plowed several hundred dollars into that site, almost all for content development, but I think it will get me 10x ROI in 2008 as the site continues to age and collect links.  It is already getting 1/4th the traffic of my main site with no advertising expenditures and minimal backlinks.  It also gave me an idea for a new business that I might pursue some time.

Worst Clunker of an Idea: Letting the business go on auto-pilot far too often.  I had a busy year (job search, new job, move, first serious girlfriend, etc) off the Internet which really crimped both the time and energy I had available for constant improvement on the business.  I'll try to figure out a way to solve that one in 2008.

Goals for 2008: More organic growth, releasing a new product (my enthusiasm is flagging for my planned second product, so I might just write it off and start on something which is more achievable on my current time budget), and more constant improvement at everything.  This year I'm aiming for $20k sales of Bingo Card Creator.
Patrick McKenzie (Bingo Card Creator) Send private email
Thursday, December 27, 2007
 
 
Nice post, thanks.

How many hours did you work on it this year (estimated). Just curious how you would calculate your hourly salary for the year.
Allen David
Thursday, December 27, 2007
 
 
It has been a good year for us (my wife and I) with the first half being considerably better than the second. Net profits have increased by about 25% with expenditure on advertising at about 20% of gross revenues. Advertising costs are down from last year as we have heavily rationalised our spending on AdWords and stopped advertising on Yahoo and Microsoft completely. We have instead tried to use free advertising/marketing more (Google Gadgets, Vista Sidebar gadget and Facebook apps) with considerable success.

Best New Idea of the Year: Facebook Apps - now generating a quarter of all traffic (though less of sales - but it is early days). Also our email newsletters have been very effective this year especially in generating sales over the slower summer months - more of that to come next year.

Best New Idea As Of Whenever It Takes Off: Facebook Apps...

Worst Clunker of an Idea: Implementing a phone-home HTML registration prompt on our Audio FlashCards software - hasn't worked although again it is early days. Our efforts at developing a corporate blog have been disappointing but that is totally down to us being slack and talentless in this regard.

Goals for 2008: Implement a 30-day money-back guarantee, better referrer tracking using cookies and start using Conversion Optimizer. I have just finished changing to counting downloads (rather than purchases) as AdWords conversions and should be turning on Conversion Optimizer next week. Oh, and we want to change our online payment processor.
Ethan
Thursday, December 27, 2007
 
 
$25 product, cross platform PC/Mac. $290K revenue, $50K expenses = $240K profit. December sales count as January income so for 2008 we are at about $40K so far. Fingers crossed for 2008 to be better than 2007!
Anon
Thursday, December 27, 2007
 
 
Great idea.

2007 was the year I finally went full time after having it as a goal and working evenings for 10 years (I'm a family man).  It wasn't hard work--more like a fun hobby for me.  Sales have been steadily increasing all year and in November I passed $20k/month for the first time. 
My (not-so-secret) secrets:
* SEO SEO SEO
* More attractive website (have to keep the people there once SEO brings them)
* Get customer feedback in every way possible.  Listen to them, build for them.
* Polish, polish, polish.  I figure each bug fix will increase sales something like 0.01%. 1000 bug fixes later and I'm getting somewhere :)

I always imagine people with money are like water pouring into a bucket.  The bucket has MANY holes in the form of bugs, inconsistencies, bad docs, bad website, crummy installer, etc, etc.  Each patched hole means less water/money flowing out, although you have to patch a lot before there is any noticable difference (just because one hole is patched doesn't mean water can't just as easily flow out of the hole next to it).

2008: Release major new version which I hope will allow me to double and triple some prices, and increase sales by 50%, for a total increase of 2X to 3X of 2007.  We'll see.

Happy New Year everyone!
anon
Thursday, December 27, 2007
 
 
Income for the year: $30,000

Total units sold: 1,359

Highlights for 2007:
Bad: Dropped almost all work on main selling application after major competitor(s) came to market. It turned out the competition didn't affect sales at all. But the drop in work meant a big drop in sales for 2-3 months.
Good: Released a new product in September.

In general I'm very pleased with 2007. I made 15K in 2006 so I think 2007 was a good improvement.

I have a FT job so I work about 10-15 hours a week on the business. Some weeks when releasing the new product or doing updates, etc I work 20-25 h/w.

My goal for 2008 is to release 1-2 new products and increase sales to 40-50K.

I've been thinking about quiting my job and going full time. If I can devote 8 hours a day to the business (an increase of 4x compared to now) will my sales increase 2x? 4x? or more? I only need 40K a year to pay my expenses.

Thursday, December 27, 2007
 
 
I don't have the exact numbers, but I think we (me and my two partners) had revenues of about $300k this year. Expenses were somewhat high because of travel costs (we do direct sales) and legal expenses, but the profit was decent.

We got started in the second half of the year selling our web app, and next year is looking to be even better. We already have an offer to license our product to a big company for a couple of million dollars a year, and we're currently negotiating terms. I'm hoping 2008 is going to be the year I can quit my full time job and do this full time.
sloop Send private email
Thursday, December 27, 2007
 
 
Business went live in September of this year.

Units sold: 13 @ $20 = $260

Best idea: Getting off my butt and actually taking this little project and commercializing it.

Worst thing: Need to improve search engine ranking, Yahoo likes me more than Google.

This has been a great learning experience. I am delighted to have sold a copy, let alone a baker's dozen and people are requesting interesting features which should expand the market appeal of the next version.

New Year's Resolutions:

Release version 2.0 early 2008.
Hire someone to translate website into Spanish, to tap into that market. Half of my sales are foreign.

Focus on a brand new product and continue to grow the business.
Assassin
Thursday, December 27, 2007
 
 
"$25 product, cross platform PC/Mac. $290K revenue, $50K expenses = $240K profit. December sales count as January income so for 2008 we are at about $40K so far. Fingers crossed for 2008 to be better than 2007!"

Congratulations! Is one platform more popular than the other?
Josh Send private email
Thursday, December 27, 2007
 
 
Non of you are mentioning how long ago you started your mISV and how many times you have filed before succeeding.
Anon
Thursday, December 27, 2007
 
 
I'll just do from when I switched to Euros in April of this year as it will save me having to convert dollar amounts. This is for two Mac only €20 apps that I write in the time I have spare from university:

Net Revenue (minus paypal fees): ~€1950
Sales:
120 regular
9 edu
19 free copies given out

Expenses: ~€95 (hosting, domain names and various other costs)

Profit: ~€1855 (US$2,700)

Best New Idea: Code Collector Pro - I released the free version in September 2006 as a very simple application I made for myself and wasn't expecting it to be noticed much, though a lot of people started using it. I decided to make a shareware version and in August of this year I released it and it's become my best seller by a huge margin (which wasn't too hard)

Best idea for the future: If I told you I'd have to kill you, though I have a placeholder at http://www.codecollector.net to help start the hype machine slowly

Worst "idea": Letting university get in the way too much, slowing my release rate (my first application, Minim, has taken 12 months to get from version 1.0 to 1.2).

Goal for 2008: Build upon the base I've started this year and start to seriously beat people's expectations for software in the markets I release in
Martin Pilkington Send private email
Thursday, December 27, 2007
 
 
2007 Revenues: 6X 2006 Revenues

Best idea: Site licenses

Biggest blunder: Getting sidetracked by projects that never get to market.

Favorite hangout: BoS, of course.

2008 Goals:
- Expand product line
- Improve newsletter marketing
- Better AdWords management
- Focus on improving conversions
Nick Hebb Send private email
Thursday, December 27, 2007
 
 
After 3 years of contemplation, 2007 has been my moment/year of realization. I finally moved out of a comfortable cubicle life to an wild ride of living life on my own. I'm a family man, and making that move was becoming more and more important to balance work/life and interests. Started the business building exercise and realized how many assumptions could be wrong, starting with 'build it and they'll come'. Convinced one more person to join the ride.

Expenses: ~3k on some new hardware.

Profits: nothing yet.

Best New Idea As Of Today: There's so much computing power out there which is hardly being used. think grid computing  applied to consumer applications (hmmm.. still in the works)

Best New Idea As Of Whenever It Takes Off: www.lytecube.com

Worst Clunker of an Idea: Being silo'ed into fancy product development and having no clue of how to get that customer.

Goals for 2008: Grab that elusive customer and make that first sale. Of course aim for a 1.0 release before that :)

Cheers! and a Happy new year to all
Girish Send private email
Friday, December 28, 2007
 
 
I'm the OP from this thread:

http://discuss.joelonsoftware.com/default.asp?biz.5.487408.32

Update: I have released a new version and started a blog. The sales are improving now. For instance, last month I made $4k in sales which is x2.5 times more than my typical month. This month the sales are not that good, but I plan to keep on working on this product next year anyway.

Sales: $16k (~150 units)
Business/academic users: 75%/25% (in sales, not units)

Marketing costs: $11 (adwords)

Best ideas:
- blog
- SEO

Lessons learned:
- never underprice
- the Pareto law is inevitable, thus focus on what makes more money with less effort for you (for me that's focusing on business users)

2008 goals:
- much more SEO!
- less development
- dump the second product and focus on my main product
- try subscription-based pricing model
- try alternative marketing methods such as press releases in industry specific magazines
- expand the functionality and create an API/SDK

Happy holidays!
microISVer
Friday, December 28, 2007
 
 
Sales in 2007: 5 times what they were in 2006, but still pretty rubbish.  I made more money from consulting than from product sales, and consulting is not what I want to be doing.

Costs: just slightly less than revenue from product sales.

Profit: only really from consulting.

Big achievement of 2007: I negotiated my 50% partner company into taking a capped royalty in exchange for their shares.  They weren't contributing anything and, because they had joint control, I was getting increasingly unhappy with that fact.  "Getting to Yes" book and negotiationtip.com podcasts were tremendously helpful, and, having been through the experience, I am now far more confident in negotiation.

Biggest weakness of 2007: I'm really starting to spend far too much time here.  I absolutely need to work on reducing that...

Prospects for 2008: I've got several big opportunities that look like they're in the pipeline, and two of them in particular could alone bring me several times the revenue from product sales that I got in 2007.  The product is better than ever and improving (still a long way to go though), traffic is on the up (due to some serious SEO efforts), and the market is growing steadily.  So I'm quite excited :-)
MB Send private email
Friday, December 28, 2007
 
 
very beneficiary topic, thanks for all..
anon
Friday, December 28, 2007
 
 
Highlights:
-Released v3 of PerfectTablePlan with lots of improvements. v3.1 now out in beta.
-Sales rose very nicely in 2007, despite increased competition.
-Feedback from customers generally very good.
-Stopped paying for magazine ads. No discernable drop in sales.
-PerfectTablePlan featured in first commercial quantum computer demonstration (http://www.perfecttableplan.com/html/newsletter10_web.html).
-Dropped Netbanx in favour of e-junkie+PayPal.
-Meeting up with some of my peers at ESWC2007 and ACCU 2007.
-Started my successfulsoftware.net blog in April. This has had some 230k hits so far (over 50% for the 'software awards scam' post) - far in excess of expectations.

Lows:
-Worrying too much about a new competitor. They generated a lot of buzz (in all the wrong places) but now appear to have crashed and burned.
-Wasting my time and energy with MS "Works with Vista" logo program.
-Struggling with idiot accounts people at various companies - especially a publisher who kept sending me dire threats about money I didn't owe them.
-Website outages, disk failures etc.

Goals for 2008:
-Release PerfectTablePlan v4 - lots of major new features planned + lots of marketing.
-Keep the blog going.
-Find some time to start-up the consulting side of my business (providing an independent assessment of marketing, products and processes for mISVs and larger software companies).
-Outsource more?
-Spend less time on this forum? ;0)
-Lots of other ideas, if time allows.
Andy Brice Send private email
Friday, December 28, 2007
 
 
> -Worrying too much about a new competitor. They generated a lot of buzz (in all the wrong places) but now appear to have crashed and burned.

OFF: Andy, could you please share the competitor URL (in semi-encoded form, if you like to not increase their page rank) -- failure stories are more educational than success ones IMHO... thanks!
Vladimir Dyuzhev Send private email
Friday, December 28, 2007
 
 
Patrick,

Would you mind to share with us the conversion ratio that you had between organic search and paid search? so we could get a better measure on how effective the SEO work that you have has paid off, vs. the ones that come from AdWords.

TIA
Shloma
Shloma Baum
Friday, December 28, 2007
 
 
Vlad,

I have emailed you off list.
Andy Brice Send private email
Friday, December 28, 2007
 
 
Follow up (I'm the "Great Idea" anon above).  Discussing failures is a great idea--shows the path followed.

15 years ago while in college I had a small shareware app but decided I wanted a company.  I wrote a computer security app.  Sent out 500 direct mail letters to people I thought would be interested (on official looking letterhead).  Didn't get a single response :(  Gave up (Google didn't exist--not even sure Yahoo did)

Next year I built a niche 'thought of the day' desktop app.  No competition to speak of back then.  Visited a book store in the same niche.  No interest :(

Kept plugging away at the shareware app, improving website (hosted by CompuServe.com), etc.  It was bringing in $500/year, and was a hobby.  I tell me wife: "Someday I'll buy us a house with my shareware sales!".  Wife: "Sure dear...."  :)

Five years later I'm at work using a very expensive app and it's a piece of #^&@*!  "I can do better than this!" I thought, so started building it (it was roughly in the same category/niche as my shareware app).  Version one sucks--UI looks like it was built by a computer programmer.  But it got a few sales!  Maybe up to $1000/year now.

Improving new app is hard, sales are slow, so I write a consumer app for optimizing your computer's performance.  Fun, new technology, etc.  $19 and sells pretty well--$1000 in just one month!  On the front page of Downloads.com for two days.  Then support requests pour in :(  Some people gushing and thanking me, some can't figure out what to do, some swearing at me for alleged computer problems :(  Don't like the negativity and support burden is too high -- not worth it.  Drop the app after a year or two even though it's sales are good ($1000/month for a few months)

Starting to 'get' UI, web design, marketing a little bit, so polish website and two existing products.  Sales go up a bit.  Finally decide to bite the bullet and completely rewrite UI of apps - takes 9 months (only evenings and weekends) -- sales double!  Have enough customers now that their lists of requests are being written down as a TODO list.

Do last paragraph a few times (improve UI, better web site, marketing, AdWords) and sales keep slowly increasing (20% per year).  Introduced another app based on 90% of the code from an existing app that is being sold.

Meet good friend that is into SEO.  Kicks me to get my site listed on Google (not shown in top 100 search results).  Vastly improve SEO, contract with a designer for a professional looking site, next major version of app with lots of customer-requested features, on front page of Google.  Hit the elbow of the hockey stick!  Sales start increasing about 10% per month!  ... And they're still climbing. 

One other thing: As the apps kept getting better, I had increased confidence in raising prices.  Price increases _always_ brought an increase in sales.  Prices will be doubling in February with release of next version :)

HTH.  Good luck everyone, and have a happy new year
anon
Friday, December 28, 2007
 
 
Alex Send private email
Tuesday, January 01, 2008
 
 

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