Kagi Frequently Asked Question

Question:

The business of creating software for distribution on the internet

Answer:

Absolutely the most successful products distributed on the internet are those that: are good, are useable by the largest number of people, are easy for people to use on a trial basis, and have a compelling reason for people to pay. No one is born knowing how to create such a product or being able to do all the other things that get people to pay you. While you spend lots of time learning all this ...

Do Not Quit Your Day Job

Even if your product is wildly successful and you are earning many times more than your day job, keep in mind that your massively successful product could become obsolete tomorrow and your income could suddenly cease. You and your family will sleep easier if you keep a day job that pays the bills and puts food on your table. Consider reducing your monthly overhead by paying for your home, paying off all your loans, saving money for future large expenses, etc. As you reduce your monthly expenses, you can safely reduce from a full time job to a part time job. When your monthly expenses are so small that you can earn that amount each month by working a day or two as a consultant, you'll know that the day job is not required. Until then, always have a way to pay your bills because the chances are that your first product will need lots of tweaking over a long period of time before it has a chance of being successful.

The above advice has nothing to do with creating a good product. So on to advice on creating a good product. Telling someone to write a good product is like telling them to ...

Buy Low and Sell High

You should write a product that everyone will want to purchase. :-) Well duh. :-) It's easy to say that and very difficult to do. A bit more constructive advice is that you should write software that others think is better than the competition. One easy way to be better than the competition is to create a product that leverages some expertise or passion that you already have. If you spend idle time pondering some subject area, chances are good that you might be the best informed programmer in that subject area.

You should be able to do a very good job of writing software in your subject area because you know it so well. Within your area of passion and expertise there will be a wide range of products that you could create. Look at the existing products and envision one such that ...

Everyone Will Want It

Find a bunch of people who would want this type of software and ask them what they would want it to do. If you cannot find enough people to give you suggestions, either there is not a big enough market or you need to first figure out how to locate these people. These people will be your beta testers. Once you start to get suggestions from lots of people, consider if this market has money to pay for this kind of software and if what they want will sell to lots of people or just a very tiny segment of these people.

Imagine all the people who use your chosen computing platform. Imagine what percentage of these people are interested in the area in which you have passion and expertise (this will be a small subset, lets say 1 out of 100 of the overall users of that platform). Within this small subset, you can have products that are used by everyone interested in this subject. Software that appeals to them might sell to 1 out of every 10 of those people (1/100 * 1/10). Server or multi-user software that is shared by many people might sell to 1 out of 20 of that group (1/1000 * 1/20). Programmer and developer toolkits might be used by 1 out of 100 of the people that would purchase a server (1/20000 * 1/100 or 1/2000000).

1/1000 Useable by any single person
1/20000 Useable by a group of people
1/2000000 Useable by programmers only

Develop a product that you are expert in AND keep in mind what percentage of the overall potential market your product will sell to. A product that deals with controlling telescopes might get 100% of that market (sell a copy to everyone) and still make very little money as compared to a screen saver that sells to less than 1% of the entire market.

Next you have to get your product into the hands (and minds) of those potential customers so that they will become addicted to your product. What causes people to spend time becoming addicted to your product ...

The First One Is Free

This is the key to internet software distribution. You want to provide enough functionality for a long enough period of time so that people become accustomed to your product and not having it is not an option for them. The easiest way to do this is to provide a fully functional product that is easy to use and does things that people want. Of course this is in direct conflict with ...

Getting People To Pay

For any product distributed on the internet there is a slider that goes from (Full Functionality and Payment Optional) to (No Functionality until Payment Received). Finding the optimal balance between these two extremes is not easy.

You want to provide enough functionality for a long enough period of time so that people become addicted to your product and so that they become enticed to pay you.

Here are some examples of ways to do this.

Desktop Appearance Manager

Imagine software that beautifies the desktop. This software pops up a message maybe once or twice a day that asks for a payment. The message it delivers is humorous and sincere and the unpredictable appearance of the message causes people to want to have it stop interrupting them. The software is fully functional because it is not essential to anyone's business. When they pay, they are mainly paying for the code number that causes the annoying dialog to cease.

Game

Imagine a network based multi-user action game. Imagine an annoying dialog that pops up during every 5 games or so that comes up at a critical moment and requires that them read it to figure out how to make it go away. During that time, the other users will most likely kill their character and they will lose the game. Most people will pay to keep that from happening.

Graphical Utility

If the utility does graphical manipulations, you could put an advertisement along the edge of the resulting image. When they pay the advertisement goes away.

Network Utility

For network utilities, you could require that they restart the program after every ten actions, you could randomly hide some results, you could limit them to at most two simultaneous actions, you could timer the software so that after 30 days it starts to become annoying, it depends upon the product.

Word Processor

You could limit the size of the document that can be produced, require that they print one page at a time.

Network Server

After a month, every couple of weeks you could pop up a dialog at 2am that stops that service from functioning until they click on it. If your server software is critical to their users, having users complain early in the morning will probably get you a registration fee.

Operating System Extensions without an Interface

In many cases the only thing that can be done is to put up a payment request on startup. If that is all you can do, that is what you do.

You need to spend time brainstorming with friends and your beta testers on where to draw the line between the two extremes. You want to entice them to pay without causing them to be so annoyed that they stop using the product.

Common Mistakes

Some people develop massively complex password schemes to prevent multiple users from using the same password key. You want to be careful about this. You don't want to make it so difficult for a legit paid user to move their software to their new hard disk, etc. You will spend lots of time just helping them move the software from one disk to another. Legit paid users will dislike the hassles and will not recommend your product to their friends.

Some people provide very short trial periods for their software. Few people will install some software and then devote the next two days of their lives to a massive testing of your software. Most people will install it, launch it, and see what it does then not use it for another month or two until the need for your software presents itself to them. Do not use short trial periods. Instead consider counting the actual hours used. If they have been using it actively for 10 hours over a period of a year, chances are they have a pretty good idea what it does and whether they should purchase it or not.

Do not use a specific calendar date to determine when the software should cease to function. We still receive payments for 3 year old software that people have just found on a floppy and are just now trying. If you kill the software on a specific calendar date, you will lose sales. Worse, you will receive support questions from these people on that date.

Protection

Many software authors spend a great deal of time on how to prevent people from stealing their software. Some of the most successful software has the least restrictive protections. In my opinion, you should accept that there will be theft and primarily focus on providing the best product that you can. Here are the various protection schemes that I have seen.

None

Clicking on the "I've Paid" checkbox in their preferences causes the "Please Pay" dialog to cease to appear.

Secret Move

Some software has a field where you can enter the registration code but nothing entered into that field will ever unlock the software. Instead there is some secret move that unlocks the software. For example: click on the red shoes three times and then type OZ.

Secret Code: Universal

There might be one secret code that you give to everyone who pays. They all get the same secret code.

Secret Code: Random

The secret code might be randomly constructed where specific characters in the code are derived from the other characters so that your software can determine that the code was probably generated by you. Otherwise the characters are random.

Registration Code: User Data

It is very common to derive the registration code from information provided by the user and then to display that user information in the software so that their information gets passed to anyone to whom they give out their code.

Unlocked Version

When someone pays they are sent or they are given instructions on how to download the unlocked version of the software.

Tricks

Of course your splash screen (the first one seen when launching your product) should ask for a payment if the software has not been paid for. But, do not just put your payment request message at startup. People will treat it as a normal part of using your software and they will ignore it. Ask again sometime during the day and hopefully you will remind them while they are trying to make a good impression on someone.

Do not dismiss the payment request message through a simple keyboard button press. Instead, swap buttons around, make them read the buttons and select the correct one with their mouse.

Do not make it easy for them to dismiss the payment request. You could have them do a simple math problem like adding two numbers together. Eventually they will decide that the small fee you are requesting is worth it just to not have to have the payment request interfere with their normal operations. Use TV commercials as your guide. You are the sponsor of this product and making them react to your commercial is part of the game.

Do keep track of user metrics, when they first installed the product, how much they have used it, how much time you estimate they have saved or in the case of games, how much time was spent. Give them reasons to pay based upon their usage of the product.

Do not tie your software to someone's hard drive parameters. People reformat their hard drives, they upgrade to larger disks, sell their machines, etc. You will do lots of support for legit users every time there are changes to their hard drive.

Do not threaten to erase their hard drive if they are using a known pirated registration code because you will get blamed for the next bad thing to befall their computer.

Do keep track of your registration codes that have been posted to the internet and in future revisions, disallow these registration numbers.

Do check for registration code validity in several places in your code and only enable some of these various checks on, for example, odd weeks or even months. If someone publishes a patch for your software, it will work until the next month and then it will cease to work. The cracker will have moved on to other programs and everyone who was using the pirated version of your code will find that it ceases to function.

If you are worried about pirates posting your registration codes to the internet, and you know where such codes get posted, you might wish to post some fake registration codes that cause the program to appear to be unlocked but after some period of time, the software reverts back to being locked. If the person using the software needs the software, they might pay when the code stops working. If they are not really using the software, they will probably never notice that the fake registration code stopped working.

Trial and Error

If your product is not providing the financial success you expect, run experiments to find out why. Four possible reasons are: people are not getting exposed to it and thus are not becoming addicted, people love it but are not paying for it, there is better software available, the price is too high.

Price

US$ 10 seems to be on the low end and US$ 80 seems to be on the high end for single user software. The average seems to be around $16. The best price is the one that brings in the most revenue and choosing that price is always a balance between selling millions at a one dollar and selling only one copy at a million dollars. Ask your beta testers for their opinion. In the final analysis, your software is only worth what others are willing to pay for it.

A program that does something simple and is not critical to the user should be priced less than a program that is essential to a user's productivity. People will pay more for a unique product with no competition, for a useful product, and for a product that is just way cool to have and enjoy.

A low price is only essential when someone has to buy it before they can try it. If they can try it before they buy it, the question someone asks themselves is whether it is worth the money to remove the annoyance, not whether the price is too high. For many people the price is not an issue, it is the hassle of paying that delays their payment.

Competition

Your product has to be competitive. Learn about your competition and either find a different market or make your product such that everyone who compares them finds your product to be better. Big companies with teams of salaried programmers move much slower compared to one programmer with the complete program in their head and a passion to do it right.

One of the biggest factors influencing internet software sales is not how well the program performs its function, but how solid it looks and feels. The user interface is critical. A rock solid product with a shabby interface will be perceived as inferior to a buggy product with a pretty interface. People do judge a book by its cover so find someone who can make your product pretty.

When you are completely finished with all your documentation and bug fixes and the product is bundled up and ready to upload to the internet, send it to your beta testers and have them beat on it for a couple of weeks. Repeat this cycle of bug fixes, being "completed" and then sending it to your beta testers until all the beta testers report no problems. Only after they say it is ready to go should you release it to the world.

Slow Payments

Perhaps your users are weighing the annoyance of your payment requests with the cost of the program and are deciding that the annoyance is more cost effective. You can lower the cost to below the annoyance or you can increase the annoyance above the cost. Experiment and see if either works better.

Exposure

Part of what you must do is to get people who should want your software to try it. If they cannot use it immediately without reading the manual, people who would otherwise love it will never be really exposed to it - make it useable. If people do not download it, you need to do a better job of reaching your target market and keeping them exposed to your product. Issue revisions and explain in the revision notes that you post, on mailing lists and in news groups, what problem it solves so that others with that specific problem will give it a try.

Keep in mind the adage that "Any exposure is good exposure". Several software authors have indicated that their sales went up drastically after bad software reviews in major magazines.

Try things and see what works. This is a long process and you should give yourself time to identify whether it is your product or your marketing of it that needs to be revised. Try something and if that doesn't work, try something else.

Other Advice

How to do a price increase

It is easy to lower your product price, it is difficult to raise it. The best way to raise your product price is to create a new and improved version of your software that justifies the price increase.

Secondly, you should give it a slightly different name, for example you might go from MyProgram to MyProgram Pro or MyProgram Version 2.

You should have three prices, MyProgram at the old price, MyProgram Pro at the new price, and Upgrade to MyProgram Pro at the difference between the two prices.

The registration codes (if any) that you issued for MyProgram should not work for MyProgram Pro. Have new registration codes for MyProgram Pro. For the people that are upgrading, have them enter their old registration code and the new upgrade registration code into MyProgram Pro. When they purchase just the upgrade, just give them the upgrade portion of the code.

There are other ways to do price increases but this seems to work pretty well for most people. Vastly improved product justifies the price increase and giving it a slightly different name tends to eliminate the confusion that people might have concerning which price to pay.

Summary

Write a good product that lots of people would want to use. Make it easy for them to try it. Bug them just enough to get them to pay but not so much that they stop using your software. Do not quit your day job until a day or two of consulting will pay all your monthly expenses.

Modification Date: Monday, April 14, 1997