Saturday, November 24, 2012

Better Than TWO Sharp Sticks in the Eye, or Software Development for the Foolhardy

I've had several questions in the BeadEnCounter Forum, and on the Facebook page, about the future directions of my BeadEnCounter software. I decided to answer those questions here, and link back to each venue so everyone is informed.  Let me say upfront that I want to upgrade BeadEnCounter. I think it's the logical next step... well, read below. 

BeadEnCounter is designed to keep an inventory of craft components and to calculate costs for finished works. It first came on the market in August of 2011.

After 14 months of sales, I think I can pretty confidently say that without marketing, no product is sold. I think I can also say, that with marketing, your profit is small, if anything.

I've gone back over the sales figures and the costs involved and what I found out was very interesting.

When I started developing the software, I was first getting into beading, building my stash, and finding real difficulty keeping track of what I'd bought, what I'd paid for it, where it came from, and what it was made of.  Since I build databases for a living, it was quite easy for me to begin something for my own use. It grew and grew, and in talking to owners of bead stores and people I met there, it seemed like there was a real need for something basic in this market. There were a couple of competing products, but I thought I could build something with fewer features for less money.

At the time, we were very short of paying work (still are, to some extent). So I had time to work to create a commercial product, which is very different than producing a custom database for a business. I was the client as well as the programmer, and the knowledge expert as well! Turns out this all in one approach isn't the best.  A couple of hundred hours of design, refinement and more refinement went by....  I paid a designer for a logo and some look & feel design. 

Then I took the product into testing. I knew there were going to be plenty of things not working as designed, so I found a group of willing beaders who offered to test and to give me feedback. What I didn't realize was that the first round of feedback actually was going to lead to a major re-design of the interface and functioning of the product. Perhaps another hundred hours of my time managing the testing (four rounds) responding to bug reports and feature requests from the group by fixing or re-designing, and redistributing the fixed files. 

I couldn't have produced the product without those testers, who worked only for the reward of a free copy of the finished software. 

Then, there was the work of setting up the website (learning Rapidweaver to build it) and a new web host, and e-commerce (testing two failed products before settling on FastSpring), and getting marketing in order. I had built up some credit with a client who does marketing, so he invested the money he would have otherwise paid me in print ads in Bead & Button. Those ads cost around $1000 per month, and we could only afford four months. I did everything I could think of to publicize the software. Facebook, a dedicated forum, blogged about it, sought out online spots to place links or buy ads. I bought banner ads on Beading Daily, and newsletter ads from them. I got an article in Stringing Magazine, which was free, and actually helped quite a bit.

All this took more time, more research, more investment. 

Sales were never fabulous. Pricing software is always a question. After the print ads, and while the online ads were running, we experimented with the price point. Once the introductory sale was over, and we raised the price to the "regular" price, sales tanked. We dropped the price again, and sales resumed, but at a lower rate. Then the print ads aged out of the consciousness of the consumers, and slowly, the sales slowed.  I tried Google Adwords ads, for around $100 per month. I tried making and distributing about 150 sample CDs to my local S. California beading shops, with a discount coupon enclosed. Not ONE sale resulted from that, after the cost of the CDs, labels, and my time in burning them, labelling, and distributing them to a dozen stores. In the pre-Christmas flurry last year, I sold 10 units in one heady day... but mostly it was ones and twos, and this entire year of 2012 I've sold fewer than 80 units.

We discussed dropping the price further, but then realized that eventually, you can drop the price so far that it becomes a loss due to...  Support costs.... well support costs are only my time, and a few more gray hairs. But time is all we have, hey?  People who couldn't install, couldn't figure out the software, wanted to ask questions, etc. Some got refunds. Some got several hours of reading & responding to emails.  But those hours add up.

After marketing costs and all the incidental costs, my "profit" comes to about $2000. When I add up the time I spent on all the processes above, my per-hour rate is somewhere around $5 an hour.   Maybe $3. 

You know, I love BeadEnCounter software. I use it myself, all the time.  I know it seems to outsiders as if the makers of software products are rolling in dough, but the area of greatest profitability, it seems to me, is those marketing folks who took my dollars, and returned to me.... not as much in sales as the ads cost. Only one ad I took was directly profitable in numbers of sales attributable to it. 

I'm not whining about any of this. Like every other business owner, I have to do what I can to maximize profitability. No one can stay in business if they don't make money.  Could I sell more copies of BeadEnCounter if  I upgraded the feature set? Of course. But how many more, and how much would I clear on each one? I promised previous purchasers a steep discount for upgrade, so they wouldn't feel as if they were paying all over again. So I'd need a ton of new sales as well as re-sales to registered owners, which would probably be profit-neutral. For a ton of new sales, I'd need... you guessed it, marketing. And frankly, I don't have the capital right now to invest in a marketing campaign. I've used up my credit with clients, and our business, like so many others, is on the ragged edge of not making it. We haven't paid ourselves, as owners, a salary for more than the last year.   

Right now I certainly don't feel like working hard, for another few hundred hours, to make the marketing people happy and rich.  BeadEnCounter software will go on working indefinitely (or until your OS will no longer run it).  I'm going to keep using it myself.  I am going to plan the next upgrade from lists of requested features on the forum and from my testers. 

And things may turn around. If I come across a windfall of marketing money, or I have a long stretch of no paying work, I'll be back at. Because despite what it sounds like, it was a certain amount of fun to do. I learned a lot. And I feel good knowing that some people are using and enjoying a product I built. 

So, if you've made it this far, reading this novelette, thanks for asking the question. Thanks for purchasing BeadEnCounter. Thanks for your continued interest. Keep in touch. I'm always searching for a business case to do what I want to do, which is keep BeadEnCounter alive.