Tuesday, March 12, 2013

The Future of Software Pricing

I think everyone can agree that we won't survive long as indie developers if we can only charge one or two dollars for our apps. I don't even think $15 is enough unless you have an enormous audience. So what do we do? How do we compete with the "race to the bottom" inspired by the App Store? I don't have all the answers, but I do have my opinions and I'm willing to back them up with evidence through my business actions.

Doubling Down

Michael Jurewitz gave a great talk on the economics of software pricing at Çingleton and expanded that talk at NSConference 5. You need to watch the videos to see all the details, but the high point for me was when he said, "Take your current price and double it. If you lose less than 50 percent of your unit sales, you're making more money."

Less tech support and more revenue. That sounds good to me. When others were telling me that I should lower the price of MoneyWell when the Mac App Store appeared, I refused. I know what my software is worth and what I need to grow my company and a $50 price is as low as I'll go for an app that could save my customers hundreds of dollars a year and improve their financial futures.

Back in the '90s at one of my previous companies, I wrote vertical market estimating software for the construction industry. We sold our software for $2,995 when our competitors were selling their products at four to five times our price. Were we making five times as many unit sales as them? No possible way.

So we hired a sales consultant to improve our techniques and he immediately asked why we were selling a premium product at discount pricing. He said, "Double your price and I guarantee you will only make more money." Nervously, we announced to our customers that the new price would be $6,000 and to buy additional seats before June 1.

The result? A very healthy seven-figure sales month for May and then unit sales leveled off to exactly what they were at half the price. We doubled our revenue. How much freaking money had we been leaving on the table all those years? What could we have done with our products with that added money? Shame on us.

Not every market can handle a 2x price increase, but the experiment is worth it for so many developers.

Subscription Pricing

Another wise developer and friend, Manton Reece, talked about subscription pricing. He gave us examples of how well this works with the new Microsoft and Adobe pricing and also with his some of his own software, which he was too modest to pitch, so I'll do it for him. Check out SearchPath, Tweet Library, and Watermark—they are great products.

Chatting with Manton after his talk, we discussed what software this model works for best and the simple answer is any software with a cloud back end. It's not going to work for simple device-centric apps, but if you can fit this model, it's a great option. Think about being able to lower the price point of acquiring your product and then having more balanced revenue figures for each month throughout the year. I know I wouldn't mind few valleys amongst the hills.

In-App Purchase

Since my price point is pretty solid and my products don't fit the subscription model, I'm choosing too go a different direction: In-App Purchase (IAP).

One of my biggest frustrations with the App Store is lack of trials or demos. Offering a "lite" version of an app just adds clutter and confusion, so we have a trial version on our website for our Mac app to allow customers to try MoneyWell before shelling out 50 bucks. This is not an option for iOS so I needed another solution.

Chatting with Michael Jurewitz at WWDC 2012, we came to the conclusion that IAP could work well for No Thirst apps. Last month we shipped MoneyWell Express and proved that it is a viable option with a consistent 25 percent IAP purchase rate.

MoneyWell Express is a companion app that syncs with MoneyWell on the Mac and allows for quick entry of your transactions during checkout at a store or restaurant. The fact that most people installing it are most likely existing customers skews the IAP units numbers a bit, but I'm still very happy with this adoption rate. We'll get more interesting figures when we release our iPad version, which will be standalone.

It's important to choose wisely with IAP divisions in your app. For MoneyWell, we played with different features at lower prices adding up to the price we wanted, but it got too messy. Instead we decided that the free version would allow for access to all the features and just limit the customer to a singe bank account. Most people have checking and savings accounts with a credit card or two so we were confident that they would want to purchase our "Unlimited Accounts" IAP and not settle for the limitation.

If a customer did only have one account, they would never be nagged to purchase anything. Those that did have multiple accounts would get to use all the features, but only one account would show a balance in their Accounts list. The others would have the word "locked" there instead. Tapping one of those locked accounts presented the IAP screen where a purchase removes any hint of IAP in our app.

It's a very soft sell and lets us charge more for the app than we could without that initial free experience. I want to keep our iPad app pricing in line with our Mac apps because they are going to be nearly feature equivalent to each other. Why charge less for the same functionality?

We have not seen a serious uptick in support and our ratings have been averaging four stars, but if your app has a serious learning curve, the IAP model may cost you in sales or support. I'll report back on our iPad experience when we ship it later this year. I'm optimistic that it will be excellent.


Monday, March 11, 2013

Befriending Apple

You're writing an app that you hope will lead to fame and fortune or at least will pay the bills. If you have any hope of succeeding, you need to make friends with your platform manufacturer. For the iOS and OS X universe, this is Apple.

Like it or not, you will always have more success if people at Apple are rooting for you. They have influence over your App Store promotions, which is your best shot at free, effective marketing. This thought was brought to the forefront of my mind as I was listening to talks by Michael Jurewitz and sharing my own story with other attendees at NSConference 5.

Back before we called software "apps" and sold them through Apple's central pipeline, we had to sell software via our own websites. It was hard to get people to notice your product so download sites were a valuable marketing resource. Apple Downloads was the biggest and the best of these.

In 2006, I built a product called Debt Quencher to help me eliminate my credit card debt using the snowball payments process. It was the software that launched No Thirst Software. I knew this $15 tool was not going to lead me to any fame or fortune and it barely paid my website hosting bills at first. It was my toe in the water so I could decide to jump into the deeper waters of bootstrapping my new company.

I filled lots of paperwork to acquire a $50,000 small business loan and dove into development of MoneyWell, a personal finance tool that would fix all the problems I was having with Quicken. While developing my flagship app, I needed help making sure I had the infrastructure to sell it—one that would withstand selling thousands of copies instead of the manually emailing licenses process I had for Debt Quencher. The best place to hang out was the MacSB group on Yahoo, so I was very active there.

At the same time, I wanted feedback on my app design and the sister group, MacGUI, was perfect place to get peer reviews. I started talking about my unique single-window design for MoneyWell and posted some screenshots of alpha versions. In addition to excellent advice from designers and developers, I was contacted by a guy from Apple. He said, "I am in charge of the Business and Finance section of Apple Downloads. Could I get more screenshots or see a beta version of MoneyWell?" I replied, "If you work for Apple, I'll be happy to give you the source code if you want."

In August of 2007, my government-backed loan had run out (actually, it ran out much earlier, but I did some creative financing and spending reductions) and I had to ship what I had completed as 1.0. Let's just say it wasn't the software I wanted to release, but it was the software I needed right now.

As promised, I had included my new best friend at Apple on beta versions. As best friends go, we didn't talk a lot, or at all really, but I was sure that in his own quiet way he felt as much love for me as I did him (call me). I didn't expect much from this relationship since I was a nobody in the Mac developer world. I was just covering my bases.

I released MoneyWell and submitted it to all the various download sites including Apple's. I was thrilled to see it listed and getting healthy downloads—double digits each day! Two days later, I was shocked to see it featured as the main app on the Business and Finance section of Apple Downloads. Even better, it was also the featured app on the front page. I may have had to change my underwear, I'm not sure.

My website didn't give me realtime statistics, but I was able to see them the following day. It said there were over 20,000 downloads. I recounted the digits in that number three times. I called my wife over to look at it to make sure I wasn't having a dyslexic fit.

Twenty. Thousand. Downloads.

Holy unexpected server activity, Batman!

And this continued for the week that I was featured giving me a total of over 160,000 downloads in the first month. Unfortunately, it wasn't the version I wanted everyone seeing. It was crap in my eyes. Features were missing. It lacked half what I had planned for it, but my funding ran dry and I had little choice.

My brain toggled between praising and damning Apple. But it honestly was a fantastic gift from the Fruit Company and proved that there was a huge market for Mac software no matter what the naysayers repeated throughout my development process. All this because I followed up with an opportunity to work more closely with Apple during my app development and release.

How much bigger is the potential win today? What size win can you have by cultivating your relationship? Say hello to your Apple Developer Relations team members. Talk to engineers at WWDC and show off your products. Be an active member of the Cocoa community and share what you are doing and have learned. You never know when someone with influence over App Store placement might be watching.

And I'm not saying you shouldn't be critical of Apple, there is plenty of room for improvement. Just do it without being an asshat.


Sunday, March 10, 2013

Community Inspiration

This past week was an incredible experience—I attended NSConference 5 in Leicester, UK (don't feel bad if you didn't read that city name as LESS-ter; two years ago while visiting London, I spent a week thinking I was walking through Lee-eye-cess-ter Square). If you're not familiar with this conference, it was started by Steve "Scotty" Scott a few years ago to build more community among Apple developers.

My buddy, Scotty, has an amazing team that cares deeply about the whole experience of attending a conference. They know how precious our time is and they don't waste any of it. The venue is well thought out, the food is delicious, and every detail is polished, including down to making sure there are three wines to match each course of dinner.

NSConference always has great speakers, but this year felt exceptionally high quality. Slides were professional, talks well rehearsed, content relevant, interesting, and entertaining—it could have been an Apple event. But that's not why the three days were so successful. The difference is Scotty's insistence that we spend time as a community and share experiences and ideas with each other.

More than half of the nearly 300 attendees were first-timers and I was able to talk with 20 to 30 of them due to the structure of this event. We switched tables at breaks, we talked at the parties and meals, and we were given a goal of meeting three new people. It worked. If you didn't come away knowing many more people than when you arrived, you have no one to blame but yourself.

This conference reminded me that we have some incredibly smart people in this community who are talented and diverse. I was delighted by the creativity streaming though the participants. Attendees shared software designs, hardware hobbies, business strategies, life experiences and much more. It was inspiring.

So inspiring that I wrote three blog entries on the flight home to Houston, which is more than I published in all of 2012.

As an added bonus, I got to spend time with Michael Fey, my friend and one of the reasons our company has cool products to sell like MoneyWell Express. Any time I get to spend with my Number One is priceless.

While WWDC fills your need for a technical conference and allows you to talk to Apple engineers and get introduced to the latest tools from Apple, NSConference feeds your emotional and spiritual needs. Writing software in isolation may produce technically solid apps, but connections with your community drive innovation and inspiration. We all need to recharge and reenergize so we can be at our most brilliant—this is a great place to do just that.

If you get a chance to go next year, I highly recommend you set aside a portion of your budget for NSConference. Just don't try to steal my ticket because I'll fight you for it. If you didn't make it this year, buy the videos (when they're posted). At least you'll get a small idea of how much you missed.


Thursday, November 01, 2012

Spicy with Beans

Given the choice of choosing something that is known versus unknown, people tend to avoid the mystery item and go with the known.

Case in point: We had our annual neighborhood Halloween party and a few of us provided food (hot dogs and chili) and snacks. My wife cooked a very tasty chili, but it was quite spicy so I wanted to let people who had sensitive palates know that. I made a very simple sign that read "Spicy Chili (beef and bean)." I also included the two primary ingredients in case we had Texas purists at the party who insist real chili has no beans in it.

I like beans in my chili. Screw the rules. I was raised in Buffalo, New York anyway, so I don't get hung up on that "Real Texan" crap. But I digress, let's get back to the anecdote.

There were three slow cookers on the table containing chili and ours was the only one with the paper sign sticking out from under it stating what it was. Now all of these had glass tops and all were right next to each other. There was no doubt that each contained chili and none was harder to dig into than the others, but an hour later, one was nearly empty—ours.

The chili to the left was partially eaten and the one to the right barely touched, but our chili in the middle was down to the Crock in the Pot. Instead of scaring people off with the "spicy" alert, my sign gave them a feeling of confidence that they were going to get chili with beef and beans in it and a bit of a kick.

Obviously the beans didn't scare people off, which means there are plenty of fake Texans in our neighborhood as well.

My experience tells me that this goes for most things in life—including the products or services sold by software companies. Given the choice of buying software that is a mystery or one that the website makes obvious what it contains, people choose the known most every time. That's why many of us tend to frequent the same restaurants or watch movies we've seen before. It's safer going with what we know.

So look at your website and advertising to make sure you're being clear about what it is people are purchasing. Warning people that your software is very spicy and has beans might just be what makes them click the "Buy Now" button.


Monday, July 16, 2012

The Elephant in the Room

My apologies for the blog coma, but I'm coming out of it and will be posting on a much more frequent basis starting today.

My vegetative state started in late 2010 when I was swamped with MoneyWell 2.0 design and coding. I could have snapped out of it sooner if it weren't for the elephant in the room giving me the stink eye.

MoneyWell 2.0 was an ambitious project and one that I didn't control and execute well. Writing about mistakes and failures is part of this blog, but I wasn't comfortable doing a postmortem on it as it neared the end of development or even after it shipped. All I wanted to do was fix any mistakes I had made.

I guess I could have blogged about other things, but I wasn't inspired to write about general company activity while there was this huge beast in the office that needed to be discussed. Pretending it wasn't there simply didn't work for me.

We have passed a milestone though and MoneyWell 2.1 is awaiting approval by Apple so we can ship it. We also have redesigned our support, tutorials, and help pages on our website to include proper tutorial videos and instructional information about MoneyWell 2.1. Hopefully this will heal some wounds that we caused by shipping 2.0 without the proper training materials.

We also have some new projects started, which are moving very quickly thanks to our new, full-time designer, Dan Hauk. I can't wait to show you what we're building, but I also can't talk about any of it either because pre-announcing products and features was one of my many MoneyWell 2.0 mistakes.

Stay tuned for future blog posts. I'll push through my personal embarrassment and give you the scoop on all that has happened during that project. My hope is that any developers reading this will avoid the same mistakes and save themselves some pain.


Thursday, October 06, 2011

He Was Too Young To Die

It was 1967 and I was a five year old boy in a hospital room watching my family break down after hearing the news that my brother was dead. This reality was too hard for me to face at such a young age, so I chose to believe that my brother really wasn't dead. In my favorite cartoon at the time, Racer X was Speed Racer's brother, Rex, who was thought to be dead. I imagined Bobby also was just hidden from me.

By the age of twelve, I finally had a good cry about my loss when it struck me that 19 was too young of an age to die. My big brother had so much more to give and his passing left a huge void in my life. I was inspired to be a better son and try to fill the void for my parents.

In December of 1980, I was stunned by the news that John Lennon had been shot. I wanted to be a rock star, but my weak guitar skills and weaker singing voice forced me to choose a different path. I had just made the decision to go to college after a semester break. Graduating high school, the last thing I wanted was four years of college followed by a boring 9-to-5 job. My heroes were musicians and I wanted to inspire people like they had inspired me. The death of Lennon ripped a huge void in my life. He was who I wanted to be—unconventional, a person who changed the world. He was back in the studio recording music and had so much more to give us. John was too young to die. I was inspired to find a way to change the world in my own way even if it wasn't on a stage.

In March of 1984, my father died. I was 21, newly married, and ready to show my personal hero what I could do when he left me. This void was cavernous. He was 60 years old and too young to die. My dad's scope of influence was much smaller than Lennon's, but to me he was just as inspiring. He challenged me to be smarter, stronger, and to take risks in life. I lived to make him proud of me.

His funeral was followed by a proper Irish wake, which meant dozens of family and friends raising a glass to Fran Hoctor and telling stories of his life—I was too angry to join in much of it. Later that day, I got a call that my Macintosh had arrived and I should come pick it up. It felt wrong to be excited, but I couldn't help it. I had spent the last three months waiting for this and had become fascinated by the story of Steve Jobs and his pirate group at Apple who created this computer.

When Jobs stepped down from his CEO role, I knew he didn't have too much longer to live, but I thought we would get a year or two more from him. When I heard the news of his death yesterday, a new void ripped open for me. Steve had inspired me to create better software, to be a better leader, to inspire a team to create something that could change the world. He made me want to make a positive dent in the universe. And like the others, he had more to give us and was too young to die.

Steve was not a perfect man, but then neither were my other heroes. Inspiration doesn't come from perfection. Instead, it comes from the impact that someone makes in your life. Each of these men that died impacted my life deep enough to change my direction. They all inspired me and for that I owe each of them. My repayment will continue to be how I live my life.

Thanks to my brother and my dad, I have a deep love of family, the understanding that moments spent together are precious, and to not assume I will have time later to apologize. Thanks to John, I have a deep love of music and an understanding of how words and notes can move people to action. Thanks to Steve, I have a software company to run today. I will do what I can to honor his vision and create something great—maybe something that can change the world.


Wednesday, August 24, 2011

Thank You Steve!

In the early 80's I learned to write computer software. I really enjoyed writing software. Then in January of 1984, I touched a mouse on a Macintosh and my world changed. I fell in love with the idea of creating amazing software—code that could change the world.

I ordered my Mac 128K as soon as I could qualify for an Apple credit card.

What Steve Jobs has now—and has always had—is the ability to see potential where so many of us cannot. He wasn't afraid to fly in the face of convention and build something that no one asked for. There was no market demand for an appliance computer. The original Mac was as disruptive as the iPad is today, only the scope of technology was much smaller.

I've probably read too much about Steve Jobs and spent too much time thinking about what he did right and wrong—especially in the early days of Apple—but his tenures as CEO of Apple, NeXT and Pixar have forever changed my world. I have learned from his flaws as well as his successes.

Would I have fallen in love with designing software if I spent years writing command line driven apps? What would the graphical revolution have looked if it was built by people who weren't visionaries? How many years later would Apple-driven leaps in technology have taken?

I honestly don't want to know.

Thank you Steve being brave enough to say no to "good enough" and the vision to show us what's possible. Thank you for making computers fun and exciting. Thank you for putting a huge dent in my universe. May you win the battle over your illness and live to see many generations of breath-taking products built on your vision.


A Familiar Place

I have been here before. This place is familiar to me. Here is where the journey becomes steep, rocky and overgrown with vegetation. To my right is a well-worn path leading gently downhill. The smooth and packed soil looks easy on my legs, but I also know the destination. It's a place of sorrow and regret that saps energy from my soul.

After a moment of weakness, my gaze returns forward as I square my shoulders and seek a foothold. The first few steps cause the most strain, but this decision eases the pain and with every step my energy and confidence grows.

I have been here before and understand its temptations. It lies and deceives by offering a "better" choice but, at least this day, I will not fall for its trickery.

I have been here before and will be here again.


Thursday, July 28, 2011


I love the Black Hockey Jesus blog post ‘He’s Not My Character to Write Anymore’ not just because it's a touching tribute to his 13-year old son, but because he writes about the struggle of writing. I have too many posts that rot and die in my MarsEdit Drafts folder because I don't like them enough to publish them or I let writer's block prevent me from spending time on a post until it stops being current. I delay them and they die.

The months of silence on this blog also fills me with guilt. I started Entrepreneurial Seduction to help others build their businesses. I wanted it to be more interactive—more raw. It was supposed to a stream of consciousness, as if someone were reading a diary. Unfortunately, I'm a bit of a perfectionist and a harsh self-critic so I hold back my writing looking for the right words or that amazing sentence that everyone will quote. It's a damn shame, too, because so much has happened in the last six months that would benefit fellow entrepreneurs. Delays in writing are a sure sign of rigor mortis settling in.

Typically, the dead zones in this blog align with periods of heavy software development. Let's blame this latest on MoneyWell 2.0, which has been chatted up by me for so long that it was compared to vaporware products TextMate 2 and Duke Nukem Forever. I even allowed the code name MoneyNukem to be bantered about until Duke Nukem Forever actually shipped—and sucked. Then I wanted nothing to do with it.

So what happened to delay MoneyWell 2.0 for so long? To be honest, the 2.0 release shipped two-and-a half years ago—it was just called MoneyWell 1.4 at the time. And then I shipped 3.0 fourteen months later, but called it 1.5. What we are working on now could legitimately be called MoneyWell 4.0. The problem is that I promised too much in 1.0 and felt guilty charging for an update. I delayed incrementing the major version number, which I consider to be a major business mistake.

No matter what we call it, the new version of MoneyWell is late. Why? Because we started it late. The finish wasn't delayed, the start was. Coding on 2.0 didn't begin until October 2010 due to delays caused by our syncing issues and MoneyWell for iPhone, and our current team wasn't coding 100 percent on 2.0 until December. The complete design-development-ship cycle should stay under one year—not too bad for what has amounted to a massive rewrite of my original code. I'm not trying to minimize or excuse the fact that MoneyWell 2.0 has taken too long to deliver. I allowed too many other activities get in the way of building 2.0, which resulted in the release being delayed.

So I need to thank John Gruber and his Daring Fireball post that led me to read the Black Hockey Jesus post, which allowed me to write another blog entry on my own site without a delay. Once MoneyWell 2.0 ships—and it will ship—I'll try to avoid any delays in writing a postmortem blog entry on the project cycle. I think there are lessons to be learned from my mistakes and that is why I started this blog.