Kalzumeus Software

Responding to a post I made earlier about a temporary error which affected my access to my Paypal balance, a commenter Xanadu said the following :

The solution might be to stop using PayPal-based payment systems (such as e-junkie) and start using a real registration provider, such as Advangate, Plimus, etc.

Yes, their commisions may be higher. However, PayPal introduces an uncertainity factor.

There are hundreads of stories of people who used PayPal, were happy, and then got their accounts closed and funds frozen for no reason at all – and couldn’t do anything about it.

This is a comment point of view among folks running uISVs, and it comes up in the Business of Software boards fairly frequently (as night follows day, so shall PaypalSucks follow Paypal).  I respectfully believe it to be mistaken, and as this is a crucial decision for a business to make, have decided to address it here rather than in a comment.

I have used a “real” registration provider.  The experience was worse for me, and for my customers, than the experience with Paypal has been.  Whereas I have never lost a dime on Paypal in 7 years, I have never successfully recouped a penny off of close to $100 in sales on eSellerate due to obtusely difficult processes to connect me to my money.  Their ordering pathway is also inferior to Paypal’s, and their workflow is tedious and overly complicated for my needs.

My relationship with Paypal (since 2000), like my relationship with my bank, with Google, and with the Java community, is a calculated risk.  I cannot be sure that my Paypal balance will not be frozen tomorrow.  I also cannot be sure that my bank will not suddenly lose my records, that Google will not consign me to PRgatory, and that the Java ecosystem will not evolve in a way iminical to my interests.  In the meanwhile, these calculated risks save me hundreds of dollars versus the next best alternatives.

Why is this a crucial issue?  The dollars make sense.  On my 2006 sales, Avantage would have cost me $270 extra.  Plimus. approximately $150 extra.  etc, etc.  That is on a pre-tax profit of approximately $1,250.  That cost, unlike almost every other cost in my business, scales linearly with sales.  When phenomenally successful Andy Brice asks “What am I getting for an extra $880 per thousand transactions?” that is not a hypothetical question.  (Ahh, a thousand transactions — maybe next year.  My 2007 goal is 400.)

Even if RandomSharewarePaymentProcessor were able to offer me 4.16% processing fees (($24.95 * 2.9% + $0.30)/ $24.95), I would be very hesitant to leave Paypal.  In my market, where non-technical customers abound and eBay is a way of life, customer trust for Paypal is a heck of a lot higher than customer trust is for Patrick McKenzie.  Trust is currency, because without trust I get no currency.  The Paypal name means “Buy here and you’re covered” to the astoundingly high seventy percent of my customers who have an account with them.  Its like the Good Housekeeping Seal of Approval, 2007 Edition.

Finally, speaking of ecosystems, Paypal is big enough to have one.  This has resulted in numerous services springing up around Paypal, such as e-junkie and Payloadz.   I have sung the praises of e-junkie on many occasions.

P.S. If the prospect of having your Paypal account frozen is still too scary to contemplate, consider a) telling them to “auto-sweep” (transfer the entire balance daily into your bank account) or b) sweeping manually, keeping perhaps 2 sales worth to cover any refunds you may need to issue or chargebacks you may need to absorb.  This limits my maximum losses on Paypal to approximately $50, plus whatever damage to my business continuity the freeze would cause before I could type “mv purchasing_esellerate.htm purchasing.htm” into a terminal somewhere.  If you’re particularly paranoid, get an extra account at your bank to link Paypal to, since they can’t then use ACH to muck with the cash in your real bank account.  Most banks will hand out checking accounts like they are candy (although it might cost you a hard inquiry on your credit report).

… you should really, really read Andrey’s post about time trials.  I’m afraid I don’t have any constructive comment aside from “Yes”.  It also dovetails with some of the observations I made about feature-limited trials versus time trials some months ago.

I had a bit of a situation this weekend and decided to post the resolution here because God knows a Paypal customer with a problem has not a friend in the world.  Hopefully the magic of Google will get it to the right people.

This weekend I tried to withdraw money into my bank account and I got an error: “You must confirm your primary email address before you can withdraw money”.  Which, of course, I had already done.  Trying to reconfirm my primary email address caused the error “You have already confirmed this email address”.  I faced the unpleasant prospect of having to communicate with Paypal customer service — oh no!  Luckily before that terror came to pass I tried adding a new disposable email account to the Paypal account, which worked like a charm (without needing to be set as my primary address, so no disruption happened with my IPNs or e-junkie).  I’ll let the disposable email address sit there a while, as I have the totally unsubstantiated worry that adding and removing addresses in a rapid fashion could cause a fraud review.

Like many computer programmers, I have a weird fascination with bright, attractive, modern-looking interfaces.  Its almost unhealthy.  GMail and Sharebuilder and many of the other sites I visit on a daily basis have good use of AJAX (well, OK, Sharebuilder’s is obnoxious — but it sure is shiny!) and I think it, in general, adds to the experience.  Unfortunately, I have the web-programming ability of a newborn squirrel, so I was resigned to always having my website look and feel a wee bit frumpy.  Granted, the open source design at least lets me have coordinating colors and an attractive look, but the ordering pathway, for example, is rather abrupt.

Until now.  e-junkie, who I use to handle payment processing (Paypal takes the money, e-junkie sends out the key), has made some significant improvements recently.  First, they started taking Google Checkout, which as I mentioned earlier greatly increased my interest in Google Checkout, since it would greatly decrease the costs to switching over from Paypal.  Then quite recently (I got an email about it within the last 48 hours) they rolled out what they call a Fat Free Cart. 

Its actually much more fun to play with the cart than it is to have me describe it to you.  Run on over to their page or to my test purchasing page which incorporates it and have a looksie.  (That link will go bad within 48 hours.  If it has already gone bad, try my normal purchasing page.)

Anyhow, here is me trying to describe it in words: the cart is a very, very slick interstitial popup over your website.  You can clearly see the original site’s branding in the background, but you can’t interact with it while the cart is up.  The cart seemlessly integrates both Paypal and Google Checkout — just click the checkout button on the bottom and you’re wisked over to the appropriate page to complete your transaction.  e-junkie handles all the email sending and key generation (assuming you use that option) in the background.  At the end of the transaction, your customer ends up back at your website at whatever page you’ve specified.

The best part: it took me 45 seconds to integrate the cart with my page.  Take Javascript code, copy-paste.  Update Buy Now URLs.  Done.  Everything else is accomplished by their significant web-programming wizardry, allowing me to get back to the important business of getting Bingo Card Creator 1.05 ready.

I’m told there will be support for volume licensing added to the cart within 2-4 weeks.  This makes me unspeakably glad because I’ve wanted to offer it (and have offered it), but it was previously incompatible with e-junkie.  As a result, I used eSellerate.  With this coming right around the corner in the cart I have given eSellerate the old heave-ho.  They can keep the $90 or so in sales (I never made it up to $100 there to trigger them writing a check) — I’m quite glad to be done with their quirky interface and murderously long ordering path.  Plus with the Fat Free Cart (sidenote: does this strike anyone else as a silly name?) I get Google Checkout as another payment option “for free” in terms of marginal effort, so I no longer have to keep prices/keys/product descriptions/emails synched around two payment providers.  From the POV of my customers, Paypal and Google Checkout are distinct.  From my point of view, I control both through my e-junkie control panel (which, if you haven’t seen it, is one sweet AJAX app if I do say so myself).

I continue to advise anybody and everybody just starting out on their uISV to use e-junkie.  Its cheap ($5/month) and it gets you back to doing your business in a matter of minutes, rather than worrying about boring payment processing trivia.  Their customer support is also fantastic.  Obligatory disclaimer: although I probably praise them enough to be an honorary member of their marketing staff, I’m not compensated in any way for it.  Well, aside from the fact that they help me make a couple hundred dollars every month.

After having an extraordinarily poor month in December (I suppose I should post stats for that), mainly due to the influence of Christmas and Christmas vacation, January has been going like gangbusters.  I’ve had my two highest sales days ever yesterday and today, and have already sold more in January than the entire month of December.  I’m not entirely sure whether this is due to a spike in interest due to the new term starting (which means teachers need a new first day of the term game) or whether it is due to me now being on the front page of the search for bingo cards on Google, which has resulted in a sustained doubling of my traffic.

Hairy Irish has mentioned in the past that January is always a good month for him, and this could possibly be a seasonal bump here, too.  I wish I knew what his market looked like so I could tell if they looked anything like my own, but as he is happily anonymous I guess I will have to just speculate.  (My totally unsubstantiated guess is that he sells software to a broad horizontal consumer market.)

Regardless, I certainly hope the trend continues.  If I can finally find some time alone this weekend and don’t fall ill again (this last week I’ve been laid-low by a cold) I hope to get a new version of the software out, which will provide a short-term spike in downloads and hopefully a modest long-term improvement in conversion rates.  It incorporates many of the improvements in printing and layout that folks have been requesting.

… I have a recommendation for you. Not a stock, ick, I trust the market to routinely beat the bejeezus out of my picks. Instead, I’m going to recommend a way to save a few tens of dollars on your commissions, because I’m taking advantage of it myself and thought I’d spread the wealth.

Since I’ve got a rather small portfolio I use ShareBuilder, since their $4 a trade pricing and “You can only buy stocks at one pre-defined opportunity per week” model made a lot of sense for regular investments at a low dollar level (I’ve been dumping $200 a month into them the last several months — thank you, bingo cards). Anyhow, now that I’m paid off with my student loan debt (thank you, bingo cards — saved me about two months worth of my usual outsized payment) I’ll be increasing my monthly investment to somewhere in the $600 neighborhood, and I was thinking of doing some diversification away from just my one index fund ETF. So I was looking at their $12 a month Standard pricing scheme, which is essentially $12 for 6 stock buys at the same once-per-week restriction as usual. $12 also happens to be 2% of $600, and 2% is the Motley Fool’s recommended ceiling on how much you should ever pay for transaction costs.

However, I’m a cheap penny-pincher, and I intend to continue using Sharebuilder for some time yet. So I took advantage of their Christmas offer (probably good until sometime in January) to get a year’s worth of Standard pricing for $99 + $5 shipping, in the form of a gift certificate. (Incidentally: $5 shipping on a gift certificate is something I would never, ever do. It costs you a postage stamp plus a trivial amount of labor. ) Which saves you $40 over the course of the year.

Why trouble myself with even thinking about $40? Well, contribute the extra $40 at a 9% rate of return for 40 years, and when I’m ready to retire thats $1,256 or so.  $1,256 is worth a few minutes of my time.

I only wish they had a way to sign up for this pricing on their website, since that would eliminate the $5 shipping charge AND be a heck of a lot easier. I think I can understand why they don’t offer that, though: their service is naturally very sticky (who wants to have to change brokers after you have an account with one? Its $50 to get your stock shipped over, can potentially have negative tax consequences if you have to sell your fractional shares, and is a big hassle) and they want the $40 of revenue they’re giving up hook a new person on investing with them rather than just replacing revenue from a customer who would be using them anyhow (*cough* me). This is very different than most software subscription models, where the software is not sticky and the price differential rewards the customer partly with reduced card processing charges and partially compensates them for promising not to cancel. For example, MMORPGs like WoW love customers who subscribe for a year at a time because their customers typically churn out within a year. Speaking of which, since I never play it anymore I should cancel WoW sometime…

Two notes: If you’re not already a sharebuilder subscriber, sign up through ebates and get $25 free. I did, worked fabulously.

Second, the standard disclaimer: Periodically I plug folks on this blog because I use their products myself and like them, and think other folks might be able to use them as well. I don’t get or really want anything in return for doing it.

OK, so I’m a wee bit early, but about 24 hours from now I’m getting on the airplane for my annual pilgrimage back to the United States.  That will last until the 30th.  While in principle I’m available for contact, particularly by customers, expect posting to be light-to-nonexistent and email responses to wait until the New Year.  Peace be with you and your families this year and always.