* The Business of Software

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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

how to monetize a Windows desktop app

I've developed a Windows desktop app and was thinking of either selling it or giving it for free but monetize it someway.

I cannot estimate, but making money out of it by selling it seems dubious.

What are the options for monetizing such an app ?
Mike_ Send private email
Thursday, May 02, 2013
 
 
Sell your app. You can start right now, get immediate feedback, and let that drive development.

The alternative (free -> ??? -> profit) requires you selling your customers in some form (their attention to advertisers, their emails to Nigerian princes, etc.). This seems harder (though not impossible, see Google, et al.) and requires a large userbase.
Wyatt O'Day Send private email
Thursday, May 02, 2013
 
 
Sell it for money.

I don't like the trend of that "free" software which is really not free.
Kuzmitskiy Dmitry Send private email
Thursday, May 02, 2013
 
 
Check out this post:

Giving away free (with ads/toolbars, etc) vs charging:
http://successfulsoftware.net/2012/07/
DV Send private email
Thursday, May 02, 2013
 
 
>Sell your app
ok but what if it proves to be a flop ?
would another monetization option be more profitable?
for example many free apps host toolbars etc
I don't know if it is possible to have ads like in mobiles
or have a sponsored ad embededed inside the application
Mike_ Send private email
Thursday, May 02, 2013
 
 
Definitely agree with the other responses.  Selling a "thing" for money is the best way to "Monetize" it.

It's an age-old proven strategy.

The ad-supported/toolbar-supported is unlikely to work.  When did you last click on an banner advert?  Or download an annoying toolbar?

>ok but what if it proves to be a flop ?

Don't worry 97% of software is a flop, but then again 97% of everything is a flop.

If it doesn't sell then you have the fun of figuring out why and adjusting your actions accordingly.
TomTomAgain Send private email
Thursday, May 02, 2013
 
 
>> "ok but what if it proves to be a flop ?"

Then you iterate until you find something that your customers need / want and are willing to pay for.
Wyatt O'Day Send private email
Thursday, May 02, 2013
 
 
My dear, why so much fear!

Just try different options and work hard. The sky is not going to fall if it does not sell. You will learn new ways of selling. If it doesn't sell using one method, try another.

But don't give it free, just for fun. Give it free to make money.
Gautam Jain Send private email
Thursday, May 02, 2013
 
 
>but making money out of it by selling it seems dubious.

It has got to less dubious than using it as a Trojan Horse for crappy toolbars that no-one wants.

Making decent money off advertising requires huge volume:
http://successfulsoftware.net/2011/08/04/selling-software-vs-selling-eyeballs/

Try selling it. If that feels like kicking a dead horse up a hill, use the lessons learned to create a new product. And this time think about the marketing *before* you write the product.
Andy Brice Send private email
Thursday, May 02, 2013
 
 
"would another monetization option be more profitable?"
Lets say it costs you $100,000 to develop your app.  Sell it for $100 per copy, your breakeven point  is 1000 sales (not including variable costs), every copy after that makes you $100.  Give it away for free and collect $1 per copy because it is bundled with something or you sell advertising with it (I'm being optimistic with $1, especially for an unproven product that no one has heard of).  Breakeven point is 100,000 copies and you make $1 from every copy after that.

Now look at variable costs, like support and marketing.  More users cost more to support AND more to find.  If your variable costs per copy are more than $1 and your incremental profit is only $1, you lose money on every sale.  If you sell 10 million copies you lose 100 times more than if you sell 100,000 copies.  If your variable costs are $20 per copy, but you sell it for $100 your breakeven point only goes up to 1200 copies and you still make $80 from every copy sold after that.

Bottom line: if you can't sell your app, you will lose money no matter what.  The question is, how much money do you want to lose to find that out for yourself.
Howard Ness Send private email
Thursday, May 02, 2013
 
 
+ Howard Ness

Really re-read his comment (a few times like I did) and let it sink in.  Costs for support and marketing are real.

I'm getting ready to start a Howard Ness fan club :)
Doug Send private email
Thursday, May 02, 2013
 
 
Looking at variable costs alone.  Variable costs do tend to decrease with increased volume, especially when that volume is relatively small.  But it isn't linear, the biggest decreases come early, and the savings in support and marketing per user don't drop very much once you surpass 100,000 users.  If you need at least 100,000 users to get your product off the ground, you have already spent a fortune on support and marketing to get to that sales volume, and your variable costs are never going to get below a minimum required to keep your product popular.

If you reduce your price to sell more copies, the amount required to support and market it is less, but the breakeven point still increases because the price drop is greater than the initial decrease in costs.  If variable costs decrease fast enough, the increased sales volume could overtake your cost curve so you will eventually make money, but if you push your breakeven point too far out, your revenue and cost curves will never meet.    And this is all assuming you have unlimited access to capital to carry your business while you are losing money.

Bottom line:  If you can't sell your app in small volumes without making money, you never will.
Howard Ness Send private email
Thursday, May 02, 2013
 
 
I'm sitting at home taking antibiotics and painkillers, so I'll keep rolling on.

Looking at successful "free" business models in software.
1.  Google.  Uses software services (just provides services, not their software) to sell billboard ads.  They are ugly billboard ads, but they are ads that are seen when someone drives their browser past them.  To encourage drivebys, Google offers free maps.  To get people to use their browsers more, Google offers free apps.

2.  Apple.  Spends money to develop software to be bundled with the hardware it sells.  iTunes sells music players, Safari, iWorks and Garageband sell Macs.  Apple provides a marketplace where other companies spend money to develop free software that helps sell iPhones and iPads.

3.  Fogcreek.  Uses a free service called Trello to drive business to it's not free version of the same product.  This company is using Joel On Software as a marketing tool to drive business to all of its not free products, but obviously feels JOS isn't very effective anymore.  With Trello, a different approach has been used.  Now that our host feels that Trello has reached a critical mass, it is time to sell premium Trello services.  Most (if not all) of the fixed costs to develop Trello were covered by the staff and infrastructure already in place at Fogcreek.  So if the variable costs of a premium Trello service is less than the price for that service, breakeven point for Premium Trello is 1.

Take this for what it's worth, advice from someone with 25 years of business experience who will never break through the ceiling to the executive floor and who never went anywhere with his own ideas for software products.
Howard Ness Send private email
Thursday, May 02, 2013
 
 
>If your variable costs per copy are more than $1 and your incremental profit is only $1, you lose money on every sale.

"Perhaps they are like the mercer, who, having assured a lady customer that the silk he desired to dispose of to her actually cost him more per yard than he charged for it, was asked how he then could afford to sell it so low.  “Ah, madam, he replied, we depend for our profit on selling a large quantity.”

http://www.barrypopik.com/index.php/new_york_city/entry/we_lose_money_on_every_sale_but_make_it_up_on_volume/
Andy Brice Send private email
Thursday, May 02, 2013
 
 
+1 to sell it.  If it becomes popular enough to make money solely through advertising you're much more likely to make MORE money selling it as a product.
Cowardly Poster Send private email
Thursday, May 02, 2013
 
 
As an open question to the group.

Is there anyone who is actually making any  money ( say greater than $2k per month ) through advertising or toolbars?
TomTomAgain Send private email
Friday, May 03, 2013
 
 
I seem to remember there is one person here making quite a bit more than that but I forget who it is.

A while ago (s)he posted a defence of making money through toolbars and noted or hinted at quite a healthy income.
Jonathan Matthews Send private email
Friday, May 03, 2013
 
 
I make good deal of money on bundling and Adsense, 6-digits/month. I could retire today if I wanted (I'm 40).

So, it's doable, but requires volume. I do about 50k installs/day. My products are free, which helps drive the download count up.
Jaywalker Send private email
Friday, May 03, 2013
 
 
Interesting stuff Jay.

That's approximately 1 million installs a month which is a lot of software.

The first thing I can think of off the of my head that would have that type of appeal is something like winzip or an alternative to Flash.
TomTomAgain Send private email
Friday, May 03, 2013
 
 
Wow, that's nearly 20 million installs a year. Nice stuff man.
Bring back anon Send private email
Friday, May 03, 2013
 
 
I once worked for a company that paid to get their app into Kazaa (a gnutella kind of app).  As I recall, they paid 10 cents per install, which is roughly in line with what Jaywalker is saying.  It was a slimy app though -- you shouldn't have to pay someone to install your software.
Doug Send private email
Friday, May 03, 2013
 
 
Just to clarify. It is not a single product, but a range of different products. Not all very advanced, but products that solve one specific problem for the user.

Also, remember not all users are very knowledgeable about software. While all of us here on BoS will know about WinZip, many users won't. And with the millions of users out there, there are many product niches to target. The key is finding a way to get those "unknowing" users into your net and sell them your software (or show them some ads).
Jaywalker Send private email
Monday, May 06, 2013
 
 
Jaywalker,
first of all congratulations for your app.
At the time you were about to release your app, why/how did you decide to go the ad-way rather than selling it ?
Mike_ Send private email
Tuesday, May 07, 2013
 
 
Mike,

I started with a few products that I sold (and still sell), and then I started experimenting with bundling in the trial versions and saw the possibilities. The free products mainly compete with other free products, so it made most sense to keep mine free too.
Jaywalker Send private email
Friday, May 10, 2013
 
 
Jaywalker,

Which method is better for you? Bundle free version or sell the pro version?
mmmage001 Send private email
Saturday, May 11, 2013
 
 
Bundle, by a quite large margin.
Jaywalker Send private email
Saturday, May 11, 2013
 
 

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