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Subscribe Now to Al Harberg's Software Marketing Newsletter, the best way for software developers to get free, usable marketing information. We'll never use your email address for anything besides sending you this twice-monthly newsletter.
It's All About Marketing
Tucows' founder and president Scott Swedorski announced earlier this week that he has resigned from Tucows. Scott created Tucows in 1993 as a way to provide users with downloads of both freeware and trial versions of shareware. Today, the Toronto-based company's stock is publicly traded (OTCBB symbol TCOW), and Tucows hosts more than 30,000 software titles in its worldwide network of partner sites. In addition, Tucows is a major provider of domain name registration services, with more than 5,000 active resellers in more than 100 countries. Al: You created Tucows in 1993, and stayed with the company through its acquisition by Internet Direct in 1996, its acquisition by STI Ventures in 1999, and the Infonautics merger in 2001. Why are you leaving now? Scott: Believe me, it was not an easy decision. After a while you have to decide: Is this what you want to do still, or is there something else? The company has changed quite a bit from the days when it was just a hobby. As a public company there are many things you have to do, and it restricts you in some ways. You now have a CEO, COO, CTO and staff members, all wanting something different. I finally made the decision that I wanted to still remain in the business but try and venture out, and do something new and build it from the ground up. It was one of the hardest decisions of my life to give up something like Tucows. Al: What will you be doing next? Scott: I'm not really sure yet. I have many offers to go work with other companies, but I am still looking over my options. I still want to stay involved with the shareware community in some way. For now I am going to take a little vacation and enjoy the holidays, and start working on new things after the New Year. Al: Will you be staying close to the software development community? Scott: If I can find a way to work it, most certainly. You won't see me start a new download site or anything, but there are many other areas that can be filled. Al: Earlier this month, Tucows reported its eighth consecutive quarter of positive cash flow from operations, and its fifth consecutive quarter of profitability. Do you think that this kind of financial success means that we'll see more download sites following Tucows' model for generating revenue? Scott: There is always room for more. Download.com and Tucows were the top two out there. Authors should really support the other smaller sites, too. Find one that works well for you and help it out. It can only help you in the long run. Al: What would be the two or three trends that you've seen over the years that would make you optimistic about the future of try-before-you-buy software? Scott: I love what Softwrap and eSellerate are doing. They are not perfect yet, but this type of distribution is going to determine how the future of e-commerce is done. Everyone should really look into that. I also think .NET will have a huge impact. Most everything Microsoft fully gets behind seems to direct what everyone else has to do. The music industry will again be something to look at. With Microsoft and CNET both announcing they will be dealing with online music again, this will open up a huge area for multimedia applications. Al: Are there any trends in the shareware industry that give you concerns about its ongoing success? Scott: With Microsoft and Apple adding more and more to their operating systems, authors need to monitor what they are doing. Apple is severely hurting the shareware market with their latest OS, and they just keep adding more and more. With the launch of the next version of Windows, Microsoft will be adding pop-up blocking, and with rumors of spam blocking and more, this does give me concerns. The operating system makers need to find a balance between what is the OS and what is software. Al: From time to time, relations between developers and download sites can be a little rocky. What advice would you give to developers regarding optimizing their relationships with the download sites? Scott: Treat them with the same consideration you would want. If you get a bad rating, contact the site with a calm and reasonable e-mail. The guy reading that e-mail on the other end is a person too. If you start with a bunch of insults, you can bet no one will help you as best as they can. Be nice, funny, and ask specific questions. For me personally, every time someone was polite, I would do all I could do to help them out. Try to establish a personal relationship with them as well. Send monthly e-mails to them telling them how you like or don't like things. If you are happy, tell them. We love that sort of thing. You may also get free stuff that way. Many times I had advertorial spots unsold. I would remember the people who were nice and I would give the spots to them. Al: If you had a close friend who was launching a business as an independent software developer, what advice would you offer? Scott: Look at the market and see if what you are making is worth it. If you decide, for example, to make a Chat Messenger or Compression program, seriously think if you can be number one or number two in the market. There are so many types of applications that can be developed; you just need to keep a close eye on what users want. I always suggest that people go to the different download sites and see what the most popular application is. This will give you a good indication on what people want or need. Al: Best of luck, Scott, in all of your future endeavors. Scott: Thank you. For ten years, I have had the honor of working with so many people. It has been one of the greatest experiences of my life. I can't wait to get started on the next chapter of my life. My door as always is open, and people can e-mail me at any time.
Selling individual licenses to end-users is a good way to make a living. Serious income, however, comes from selling multi-user and site licenses to corporations, government institutions, school districts, and other large organizations. While big businesses might not buy site licenses for your latest arcade game, you need to invite institutions to purchase multi-user licenses of most types of software. A site license allows an organization to install your software on more than one computer. Different names are used to describe these licenses. In corporations, they're known as multi-user, site, per-seat, or enterprise licenses. In education, they're called school or district licenses. There are many advantages to selling site licenses. - The most important benefit, of course, is income. While you have to offer discounts - sometimes deep discounts - to secure multi-user licenses, a 100-seat license at a 70% discount results in a very attractive paycheck. - High-profile corporations have marquee value. While you need to get the appropriate permissions, you can help your business by being able to say that you've sold a site license to, say, a Fortune-100 corporation. - Having an attractive site license program makes it easier to attract Value Added Resellers (VARs). These folks are not nearly as interested in making 30 percent of a $25 sale as they are in taking a smaller percentage of a 100-seat sale. Site licenses are not all happiness and joy. There are downsides to selling multi-user licenses, too. - The biggest issue is support. If you've sold a 250-user license for 30 percent of your normal price, and if you have 250 new users phoning and emailing you for technical support, you may have created a monster. You must make clear that the licensee's help-desk is the first contact for routine in-house product support. - Often, corporations and government agencies have contracts that you'll need to sign. Sometimes these contracts are so simple that you'll be able to evaluate them yourself. Sometimes you'll need to have your attorney review them. - Large institutions will rarely pay for an expensive license with a credit card. They're going to give you a purchase order, and expect you to invoice them. While most purchase orders specify that the company will pay you in 30 days, it often takes them two or three times that long to send you a check. To start the purchase order process, they may ask you to send them a pro forma invoice; it's a simple invoice with a delivery date in the future. In the 15 years that I spent doing application development work for two Fortune-200 companies, one of the popular catch-phrases was "Nobody every got fired for recommending IBM". It's much safer for the purchasing manager to buy a site license from a large, well-known company than from an independent software developer. You have to design your web site to overcome the concerns that corporate buyers might have about buying software from a lesser-known company: - You can't look as if you're operating your business from your kitchen table. Your web site has to have your postal address and phone number in the obvious places. I include this information on every page of my web site. At a minimum, you have to include your full contact information on your "contact" or "about the company" page. - You can't brag about being a one-person company or a part-time company. If a corporation is going to include your application in its list of mission-critical software, then they have to be confident that there will be a real person who will answer support calls during normal business hours. There are a lot of ways to structure and price your site licenses. Your pricing should be based on your marketplace. Learn what your competitors are doing, and what pricing structure your users are used to paying. If you're competing with companies that are household names, then you'll have to price your licenses aggressively. Pricing your licenses too low is not the answer; bargain-basement pricing sends up a red flag to corporate buyers. Some companies compute the license fee by multiplying the price per unit times the exact number of units. Others sell license packs, requiring companies to buy, say, a 10-pack, 50-pack, 200-pack, or 1000-pack. Think big. It might be a major mistake to offer single-user licenses, modest discounts on two through nine users, and a single price for ten or more users. Before starting my public relations firm 19 years ago, I worked for two employers who had 72,000 and 42,000 employees. Don't make the mistake of licensing tens of thousands of users for the price of a ten-seat license. Create a separate web page for your site license agreement and price schedule, and make it easy for corporate buyers to find it. Tell your prospects what they'll be receiving. If they buy a 200-seat license, will they receive 200 CDROMs? A single CDROM? An electronic download and a registration key? Specify if they can install your software on an individual computer, on a LAN or WAN, or on multiple computers in multiple locations. If your copy-protection regimen involves tying each copy of your application to a user's hardware, then you're simply not going to sell a lot of site licenses. Corporations won't agree to such a tedious installation process, either upon initial installation or when they upgrade their employees' hardware every few years. The bottom line - Often, it doesn't take any more work to sell a lucrative multi-user license than to sell a single-user license. If you structure your offer properly, address the needs of large organizations, and think through all of the support issues, you can substantially increase your income by selling multi-user licenses.
Weed Out Your Bad Marketing
Your Marketing Sucks
by Mark Stevens (published by Crown Business) The Big Picture - Stevens starts the book with "If the moola you spend on marketing isn't growing your business and bringing in more moola in return, then you have marketing that...sucks". The book hammers home the theme that you have to look at every marketing expenditure, and measure its impact. If it isn't generating more money than it costs, then abandon it. The book describes Extreme Marketing, a non-linear process in which all elements of your advertising and marketing are integrated. But if a marketing thrust doesn't deliver measurable financial results, then drop it. Sales are paramount. What it Means for Software Developers - Your Marketing Sucks gives you an opportunity to take a look at all of the elements of your advertising, sales, and marketing programs, and to revamp them. Stevens urges you to stop following the followers, and to do what you think makes sense with the market that you're trying to target. And while he states that you have to take bold and sometimes outrageous steps, you still have to measure the financial impact of everything that you do, and continue to do only those things that work. The Bottom Line - Your Marketing Sucks is targeted at larger companies that spend oodles of money on television and print ads, and whose sales volume makes tracking results easier. But the principles also apply to independent software developers' businesses. You have to have a marketing strategy - a clear statement of your company's growth and profit goals, and a plan that ensures that your marketing efforts support these goals. The tactics employed by developers aren't described in the book; it doesn't discuss banner ads, search engine keyword purchases, or advertising on download sites. But it's easy to translate the book's principles into the day-to-day world of software development and marketing. Buy the book. The chapter on Picking the Low-Hanging Fruit will more than pay for the price of the book, and the time that you spend reading it. To UNSUBSCRIBE from this newsletter, send me a note. I'll remove your name immediately and permanently. To SUBSCRIBE to the email version of this newsletter, send me your name and email address. I'll only use your name and email address for this newsletter. I'll never spam you, or let other people have your name or email address. al@dpdirectory.com To SELL MORE SOFTWARE, bookmark this web site, and visit often. There's a lot of free, useful software marketing information on http://www.dpdirectory.com/.
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