On Software Bundles

It occurred to me that it’s been about a month since I did the MacUpdate bundle in April. Now that things have settled down I figured I’d share my experiences with it.

Now, there has been some controversy concerning the bundles, boiling down to whether it is a good deal for the developers. After all this, I can’t say that the issue has been fully resolved in my mind but I’ll try to at least clarify the real issues at stake. I want this to be useful to other devs who are considering participating in bundle promotions without resorting to any demagoguery.

Why Did I Do it?

Hazel was included in the bundle with 9 other apps, the main one being Parallels. This was the anchor app that would be the big draw for most users. For me, this was a key thing. Not so much because of the potential sales as much as being associated with some larger name apps. Some people may have considered the bundle a bit boring as a lot of the apps were a bit “mainstream.” But then again, we’re talking apps that you actually see on the shelf in a store. It’s a whole level of distribution and exposure than online. What many people online don’t realize is that a vast segment of the potential user base does not scour the net for software reviews. They’ve never heard of any of your favorite Mac sites. They don’t know and don’t care about the latest Mac scandals, memes and fads. They go buy their software at an Apple store, or maybe on Amazon. Our only chance to get noticed by these users is in the oddball case when they click on that “Mac OS X Software” item in the Apple menu. The point is that for us smaller ISVs without a physical boxed product, it’s an untapped market for us. So, to be able to be associated with a couple apps from that “realm” I felt was an opportunity.

MacUpdate did run full-page spreads in MacWorld and MacLife, not something I would have been able to do myself. There is something nice about seeing your icon next to some bigger names in print. I don’t know how effective they were. The problem with print, of course, is that it’s hard to track. But again, I felt that the association would be helpful.

Now, I’m not going to give specific details concerning the money but I will say that it was a percentage-type deal. The more copies sold, the more money I got. Contrast this with a flat amount that does not vary no matter how well it sells. That said, the amount I got per bundle is way below what my product costs. So why do it? Some reasons:

  1. Volume. They will sell over an order of magnitude more copies than you will during that time period. The hope is that the volume makes up for the huge discount. The hope is more money in total.
  2. Not everyone is buying the bundle for your app. Especially if you are one of the smaller fish, you are probably piggybacking on the anchor app. One way to look at it is that you are getting part of someone else’s sale.
  3. Exposure. Yes, that nebulous thing that is bandied about. It’s hard to make any concrete claims on this one so I think it’s best to not base your decision on this factor alone. You hope your product gets more recognition in the long run but it’s hard to measure that.
  4. Userbase. By building up a large userbase, you have more people to get upgrade revenue from when the next big version comes out. Not having done a paid upgrade yet, I don’t know if this is all that it’s cracked up to be. Anyone with firsthand experience with this is invited to comment.

And of course, what’s bad about doing it?

  1. Cheapening your software. The notion here is that if you are selling your software at rock-bottom prices, people get the perception that it is not worth much. I feel this is valid but I also don’t think doing it every now and then is a big problem. I think the issue is if your product is sold at a discount often enough that people will start to expect it, waiting for the next promo to buy it. Like exposure, it is hard to quantify and so I have a hard time basing any argument on this alone.
  2. Support. Yes, taking on thousands of new customers in a short amount of time will probably result in an increased support load.
  3. Allowing promoters to exploit you. This is more of an ego/sense of justice issue. Fact is, these bundles are pulling in a lot of money. It is unclear whether the developers are getting a big enough slice of that pie. No one likes to be ripped off.

What Happened?

How did it go? Well, the bundle sold 15K copies. From what I can tell, that seems ok. Part of me expected more considering that a big name app (Parallels) was anchoring the thing. Also, it seemed like the unlocking thresholds backfired resulting in lags in the sales rate at certain points in the promotion. Personally, I’m not big on gimmicks but I leave the promotion to the promoters. I did sense a general fatigue amongst consumers with these bundles, though.

As far as the money issue goes, I got a decent chunk. If you look at it solely from a per-copy basis, then yes, it sucked. But the way I look at it is this: My revenue per month is at some amount A. I sell in a burst and rake in something like 3-4x A. Afterwards, revenue goes back to A. Now the last bit is important as it implies, to me, that I didn’t cannibalize (i.e. sold at a discount to a lot of people that would have purchased it anyways at full price) or otherwise negatively impact sales.

Now, while my sales were fine after the promotion, they didn’t shoot up (as some people may expect). This would seem to indicate the lack of effectiveness of the “exposure” element. It’s only been a month so we’ll see how it goes but at the moment, it’s like it never happened.

The question here now is what was lost. I’ll start with the more tangible cost which is support. Now, I had to deal with a support nightmare because the integration of my licensing with MacUpdate was less than ideal. I had to deal with a ton of emails with getting the program registered. Now, I’ll admit my licensing scheme was the odd-man out but I don’t get these issues with my own store. So, in this instance, the support cost to me was a bit high. That said, it was very annoying because I felt it could have been easily prevented or rectified. Outside of the registration snafu, support was not too bad. A moderate burst during the promotion and that’s it.

The other thing to consider is opportunity cost. This is the cannibalization I referred to earlier. Were you losing money to people that would have bought at full price? It’s not a question that can be definitively answered but as I mentioned, I use sales after the promotion as a gauge for this type of thing. If there’s a sales dip right afterwards, that implies to me that a lot of people that were going to buy your product anyways bought earlier to get the deal. In my case, sales were not negatively affected so I do not consider it a significant issue in this case.

Was It Worth It and Will I Do It Again?

I’d say it was worth it, but not in the way people would expect. It was worth it to me in that I got a nice check afterwards without having my sales adversely affected. As for exposure, there may be better ways to get people to know about your app without practically giving it to them. I don’t have a paid upgrade planned out yet so that was not even a consideration for me. For me to do it again, I think I would have to be offered a good deal, percentage-wise. My sense is that these promotions are more effective in the short term than long term.

Now, that doesn’t mean that it is totally ineffective in creating exposure for your app. I have seen signs that people have been turned on to Hazel who had never heard of it before. The issue here is that it has not translated into increased sales (at least so far). Maybe it will help in the long term but since it’s near impossible to quantify, it’s not a prime motivation for me when doing these types of promotions.

Did I Get Ripped Off?

To address the big controversy, no, I do not think I was ripped off though I could’ve done better. Let me start off by saying that I feel that promoters do provide a valuable service. I’ve seen some developers band together with their own bundles with less than stellar results. Fact is, not anyone can just throw their stuff up and expect to sell any large volume. There is skill and work involved in getting people’s attention. Doing it yourself is, well, just doing it yourself. If you already have the pull to get tons of people to pay attention to you, then you probably don’t need to do special promotions for your apps.

Now, I haven’t seen the books for any of these promotions plus the deals probably vary greatly depending on who does them so it may be unfair to lump them all together. But it seems to me that the promoters are getting quite a large chunk and that they can afford to cut the devs a better deal. I’ve seen arguments along the lines of “How can you criticize them? They are getting sales for developers/exposure for their software/donating money to charity/yadda yadda.” This is a logical fallacy. Yes, maybe they are doing some good things, but that doesn’t mean it justifies the bad things. There is nothing that has indicated to me that they can’t do all the good things they already do while providing a more equitable split. Again, I haven’t seen the books but my sense is that there is some leeway there.

I want to make it clear, though, that I have no complaints about my deal with MacUpdate. In the end, it was my deal to negotiate. For me, this was an experiment and knowing what I do now will help in assessing future promotions.

And of course, this is just my experience and your mileage may vary. Especially if you are just starting out, it’s possible the exposure element will be more helpful. I’m not sure how useful the exposure is for the more well-known apps but I suspect that they, having more leverage, negotiated higher percentages. In the end, you have to assess whether it fits with where you and your app are, marketwise.

Category: Hazel, Noodlesoft, Software 32 comments »

32 Responses to “On Software Bundles”

  1. EDIT-XTREEM

    Nice post. Very interesting. I’d be interested in seeing a follow up in the future to see if the exposure begins to kick in.

  2. Jacob Gorban (Apparent Software)

    Interesting article.
    By the way, were you contacted by MacUpdate or did you somehow applied to participate?

  3. PeterVk

    Thanks for your candidness!

    2 questions:

    Over the course of the promotion, what was the ratio of copies purchased to downloaded copies? Parallels alone sells for 80$, so I’m guessing that some bundle purchasers bought for the Parallels app alone. It would be interesting to know in light of your ‘piggybacking’ point.

    How was it that you came to participate in this deal? (Jacob’s question again). Were limousines and champagne involved?

    Cheers.

  4. mjc

    I learned about Hazel during the promo and have found it quite interesting, but I don’t yet see enough flexibility in it to consider it worth paying full price for. I have a setup now, that, while messy, works OK using folder actions and some really hacky shell scripts.

    I greatly appreciate your work though, and have recommended it to some of my less programming-minded friends. :)

  5. ReginaldW

    Another thing to check would be how much traffic to your website increased or decreased before, during and after the promotion. How many copies were downloaded before, during and after the promotion and how many of them came through the promotion website versus people going directly to your website from other than the promotion website. Having several months of data on either side of the promotion would allow you to see if it spiked for the promotion and then declined or increased.

    It would also be handy for the participants to compare it to the others in the bundle, whether you made it public or not. If each one in the bundle saw the same results or whether it was only certain apps in the bundle that saw the results.

    I’ve bought a couple bundles, not this particular one, based upon the apps in the bundle and my need for them at the time I bought the bundle. I buy because I can use various programs and feel it is worth it to me. I get a deal, the developer gets a sale and I have enough tech knowledge that I don’t ask a lot of support questions for the most part.

    More power to you and your sales and programming efforts. Thanks for your comments on your experiences. I’m not a programmer but have ideas I’d like to see done. Perhaps one day I will do something and have to make the same decisions you did.

  6. Matt West

    Hi

    Thanks for this article. I have been wondering how valuable other developers think bundles are for a while. I want to share what my own purchasing psychology was.

    Before buying the bundle I had not heard of Hazel at all. I had been considering buying Parallels for a while, so when the bundle appeared costing less than the “full price” Parallels, I watched until Parallels had been unlocked, then bought it. I first read the blurb about Hazel because it has a beautiful app icon (I know I’m shallow!). I just use the Trash enhancement to remove application support files when I “uninstall” applications by trashing them, I’ve not advanced to using the rules. I am pleased with Hazel because I’ve missed this functionality since I trialed AppZapper (I love it when I can uninstall applications!)

    I also use StoryMill’s full screen functionality instead of the trial WriteRoom (sorry Jesse).

    So in summary, the albeit small piece of revenue you got from me is better than the zero amount you would have got from me without taking part in the bundle.

    Thanks, and I think Hazel is great.

    Matt West.

  7. mr_noodle

    Thanks for the comments all. To answer the questions here:

    I was approached by MU (no limos though; will have to ask for that next time). I was asked to participate in their earlier bundle last year as well but declined at that time. I had done a one-day promo with them back in the fall and my guess is that Hazel sold well enough then to get on their radar.

    Downloads from the promo site were handled by MU. Judging by their stats during the time of the promotion, the sales-to-download ratio is slightly greater than 1. That said, I can’t tell how many of those people that downloaded it, purchased the bundle (many could have just downloaded to try it out) or how many that downloaded it actually use the product (after purchasing the product, they probably just clicked the download links for all the apps on their receipt).

    As for traffic, yes, I did get a big surge during the promotion. Looking at my graphs, the before and after are pretty close to the same. Maybe slightly higher now but that is complicated by other things such as putting out a point release and the DF promotion I did a couple weeks ago.

    And yes, it would be great to get feedback from other devs that participated in this, or other, bundles so please post if you are willing to share.

  8. Steve Harris

    You’ve done a great job here of analysing your experience and relating it in more general terms. I’ve done a good bundle and a bad bundle (the good one didn’t follow the typical model). The trouble with the bad bundle was that, for earning the equivalent of two weeks’ sales, I ended up doing two months of support / feedback emails and the bundle promoter got far more than all the developers combined for his week-long promo.

    You mentioned the possibility of upgrade sales. I released a new version of the app that appeared in the “bad” bundle of 3 apps around 16 months afterwards. In the first month, around 25% of regular buyers upgraded, but only around 2.5% of the bundle buyers. The app was Leopard-only and this was shortly after Leopard’s release, so that was a factor.

    It obviously depends on how many people find your app useful and whether they’d be willing to pay to upgrade down the line. As the MU promo was a bundle of 10 apps, your experience could be a lot different.

    I don’t think you can rely on promises for the future (increased exposure, upgrades, etc). For developers, software bundles must be financially worth doing at the time or you’re going to feel pretty cheated and could even end up in a worse position than if you hadn’t participated.

  9. Michael

    Hi
    I think your right on with your analysis that a lot people buy these bundles not for the small fish. I bought but I was a owner of Hazel already. Absolutely love it. This screencast thingi showed me Hazel. So exposure is critical. And a lot of people won’t fast to buy an upgrade. It would need to be a killer new feature.

  10. David Earls

    The MacUpdate bundle is the only bundle I have bought, and I did so for Parallels and Sound Studio, plain and simple. However, every time I delete an app from my laptop (an all too frequent occurrence ) and Hazel pops up with additional files I should delete to keep my system a bit cleaner, I think “Ahh, thats rather cool”. I’ve already recommended it to two friends, and will continue to do so. That must add some value to the transaction, surely?

  11. Pete

    When I looked down the list of bundled apps Hazel was the only one that caught my eye as possibly interesting enough to try. So I tried, it solved the problem, I bought a license direct rather than wasting money and disk space with the full bundle. And there was the warm glow of believing that the developer would get more of my dosh that way.

    So being included in a bundle is good advertising if you’re the only one that piques a punter’s interest, and you’re sufficiently cheaper as a singleton than the bundle’s cost.

  12. Justin Driscoll

    For me, Hazel was one of the three applications I bought the bundle for. I’m glad the experience wasn’t entirely negative.

  13. JayhawkBabe

    Great post–I had always wondered how these things worked. I do think these promo packs have some value for my user base (which is admittedly small–I am a biophysicist who dabbles in computers/programming for work and hobby.) as I bought last summer’s MU promo when I first switched to a Mac from Linux and was unfamiliar with all the applications. I have purchased updates for a number of the programs in that pack that proved useful.

    On the other hand, I certainly hate to see these groups (MacUpdate, MacHeist, etc.) cutting too deeply into developer’s pockets. Being a scientist isn’t exactly that profitable of a profession, so I understand your pain.

  14. George Coghill

    Interesting to hear your take on the bundle, thanks for sharing.

    I bought Hazel way back when it was first released, so I am not in your stats. As a shareware junkie, I always seem to already own licenses for 75% of the apps in the bundles, making them usually not worth it for me.

    I have to imagine though that most people are going for the ‘big name’ apps, and getting a slice from someone not likely to purchase the ‘smaller’ apps in the bundles is better than nothing. I put quotes around those terms as for me, I actually find Hazel to be more useful than Parallels, since I have no need to run Windows on my Mac, but I use Hazel all the time. But then again, I am not the target customer for these promo bundles.

  15. Ewan

    I have bought 2 MacHeist bundles but skipped the one Hazel was in, precisely because Parallels was in it. I have already paid for a dozen parallels licenses for my office Macs (and now use VMware actually) but was not going to pay for a bundle whose primary component I already own.
    Surely this was a factor for many – I mean who doesnt have parallels these days? In light of that what sort of customer would this bundle attract – newbies and low budget users? I think this bundle may not have been typical of the others in this respect…

  16. James

    I love the app – use it everyday! And I may not have found it without the bundle. And yes, licensing was a lot easier with all the other apps in the bundle! That said, it wasn’t rocket science.

  17. Adam

    I bought Hazel after reading about it in the bundle advert (which I didn’t buy because I use VMware Fusion). I use it to organize my downloads folder into another aged set of folders, a process that doesn’t always work to my advantage because sometimes, after Speed Download fetches an older app and unzips it, Hazell will move the unpacked version before I get to it and I have to search for it in the aged folders. I wish it would wait 10 minutes.

    Great article, though.

  18. Jonathan

    I’ll readily admit that I haven’t used Hazel from this particular bundle (haven’t found the time to look into how it works, etc.). However, I have bought about 4 bundles so far (3 Macupdate ones and the second MacHeist one). From the perspective of a purchaser, I can tell you that absolutely it is one way for developers to either promote their app or get people involved with it before an (paid) upgrade becomes available. However, just don’t expect all purchasers to start using your particular app.

    Of the bundles, I have used about 3 apps from each regularly since buying them, and 1 or 2 further ones from each less frequently. However, with the exception of Parallels, the majority of those apps that I do now use regularly were not the ‘big ticket’ items that I originally purchased the bundles for! E.g. BannerZest, Cha-Ching, PulpMotion, and PhotoPresenter are the ones that I hadn’t heard of or paid much attention to before hand, but now use very frequently. I’ve even paid for updates to the advanced/pro versions of BZ and PM. Others that I had heard of (and wouldn’t have otherwise bought) but now use a lot are CSS Edit, Pixelmator and WhatSize.

    Also, one aspect you haven’t considered in your post is that these bundles are also a good means for people who already own your product to obtain a second licence (e.g. to make it legit on a different computer or to gift to someone), with the added bonus for them of extra apps thrown into the mix. E.g. I did this for the bundle that included RapidWeaver so that I could make my brothers copy a legitimate purchase for him rather than have him ‘borrow’ my first licence.

  19. mr_noodle

    Steve: Thanks for your input. For those that haven’t read it yet, check out his blog post on his bundle/promo experience here: http://reinventedsoftware.com/blog/2007/12/17/so-thats-why-it-was-called-pinprick/

    Adam: You may want to email me or post in the forums about your particular rules.

    And thanks to all of you who purchased a license either directly or via the bundle. I don’t deny that I did get some exposure from doing the bundle and I’m always glad to see comments from people who bought the bundle for one of the big names and were pleasantly surprised with Hazel. It may turn out that the exposure pays off in the long run but that is near impossible to measure.

    My point, though, is that after a month or so out, it hasn’t translated to noticeably increased sales. There are many factors involved, of course, and it’s near impossible to isolate them all. Nonetheless, I think that any expectations or claims about an increased sales stream need to be tempered a bit. This article isn’t a criticism of bundles and promos but instead, a resource for other developers to calibrate their expectations if they are deciding on whether to participate in one. My sense is that much of the debate and actual deal negotiations revolve around less tangible aspects and should focus more on what a developer actually gets when it’s all said and done.

    Thanks again for all the comments. Also, if any devs have different experiences than mine, please share them here.

  20. cawlin

    This was a really great read, thanks.

  21. Mark

    Thank you for Yet Another My Mac Bundle Experience post.

    There have been 78 of these on the blogs so far, by my count. When it reaches 100 I want to publish them in a book.

  22. Rich

    Hazel is a fantastic app.

    Does what it says it’s going to do, is well supported and once installed and configured it’s invisible (which is a very good thing IMO)

    Purchased in 2006, well worth the price! Hope the exposure serves you well in the long run.

    I pay attention to the bundles, promos and zots and have discovered many usefull apps this way (that I otherwise would not have paid full price for, as my budget is limited) The apps that serve me well (like Hazel) are worth purchasing upgrades for over the longer term (assuming value added is there on said upgrades. Nothing frosts me more BTW, than devs who fix bugs, add 1 or 2 features and create a new “major” version they want you to pay for. Not saying this is you by any means, just a little rant. :) )

    I truly appreciate when developers give me this opportunity to use their software long term (via the reduced price) If the software doesn’t work out, I haven’t lost that much. If it does, I’ve gained a tool I can and will support.

    Cheers,

    Rich

  23. Alex A

    Thanks for an enlightening post. I have to say, however, that I am less and less a fan of the Macupdate folks. I purchased a program that advertised a 30-day money back guarantee, and when I inquired about a refund the staff not only ignored my numerous (polite) e-mails, but deleted my posts on the promotion’s comments.

    I had to e-mail the developer, who was so helpful that I decided to keep the software, despite the fact that even he could not get a response from MU. Any thoughts on those you dealt with? Did I just have bad luck?

  24. Pecos Bill

    I think there’s one small angle you missed. I would like to think you could use the number of copies sold as a tool to promote its popularity (bandwagon). People also like knowing that cash spent now may prove beneficial later on (dot rev’s, support, etc). I’m not sure at what point this becomes useful as there’s millions of mac users.

    All the best to the indie dev’s!

  25. Cell

    I saw the bundle advertised originally and was only really interested in Parallels, which made me reconsider. It wasn’t until I went to the MU site that I spotted Hazel and jumped at the bundle early! It’s one of those pieces of software that you really can’t help but love the way it is unseen but totally essential once it’s installed. I will admit that although I held off purchasing until I saw it in the bundle, I have no qualms about recommending it to other Mac users. That is another benefit you can add to the list – word of mouth from people who did buy it in the bundle, but realise that it is worth the full cost and tell others that! Keep up the great work!

  26. matt

    I trialled Hazle some time ago, way before v2. I was using AppTrap to uninstall and SAFT to sort my downloads, and bought Hazel to try and kill two birds with one stone. I used the daringfireball coupon. I wonder if that was as worthwhile promotion?

    As an owner of Parallels – and I wonder which “power” Mac user isn’t already? – the Macupdate bundle was uninteresting to me.

    I’m still to get the most out of Hazel, because even as a power user I find it very difficult to see what the actions of my filters are going to be, before it actually applies them and – more often than not – jumbles up my files. I think I’ll post in your forum about my issues.

    Seems like an app full of possibilities, though. Best of luck with it.

  27. CFoo

    I am a registered user. I wish you all the best. Hazel is a really polished application.

  28. Jason.

    Hi there,

    I find all the writing on these bundles fascinating. It’s like a behind-the-scenes exposé.

    I’m not sure if you addressed this (or want to), but I’m unclear one thing: what’s the number of license/registration requests compared to the total bundles sold? You mentioned downloads, but not registrations.

    Jason.

  29. Curt

    Paul,

    I bought a license a while back, figuring it would never come up alone (or I missed it) on MacZot or MU. I set up Hazel – then forgot about it, because it does what I ask and with few hiccups. I might have purchased the MUBundle in part for an additional Hazel license, but felt the rest of the apps including Parallels (I junked it for VMWare) were not useful or I previously had licenses.

    Your article was a great read for me – I previously had no real concept of pros/cons of bundling or discounting from the developers standpoint. I’m a bit embarrassed for being callous towards small developers, trying to get the best price on their apps. However, I also am more likely to purchase an app at its full price if I get a sense the developer is earnest and responsive to questions. You won me over with a quick, but informative email on sorting contents of nested folders, for example. I dunno if I’m a typical customer, but that’s one way I judge the merit of a software product from a small developer.

    Keep up the good work!

    -Curt

    PS: And I’ll gladly pay for an updated Hazel if required.

  30. mr_noodle

    Thanks all for the great comments and feedback.

    Alex A: If it’s concerning a specific product, it’s usually best to go directly to the developer. I’ve heard varying reports on dealing with the MU guys but for me, probably because I’m a developer, I get timely responses.

    Jason: I’m not sure what you mean by registration requests. I don’t have any sort of on-line activation and a license is generated immediately when a bundle is purchased so there’s no separate request in that sense. In any case, I have no way to gauge how many people are using/have registered the product beyond those asking for help. Is that what you are asking?

  31. Jason.

    Ah, I didn’t realize you generated licenses upon the sale; for some reason I thought the bundle purchaser had to “activate” the individual apps, not automatically get a license delivered.

    Thanks for the explanation.

  32. mjc

    Just wanted to update my earlier comment, that I purchased hazel when 2.2 came out :)


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