Seen on my login screen today: E-junkie is now processing more than a Million U.S. Dollars worth of transactions per month! Now that deserves a hearty congratulations, for a fellow scrappy little uISV which delivers a great service at a great price. Now I just need to get back to the business of getting them closer to two million a month. :) (At $425 in 15 days, I’m almost a whole tenth of a percent of their business. Woohoo!)
Banking for the uISV
One decision you’ll have to make about your uISV is where you send all your hard-earned money. This gets a bit more complicated if you’ve got an international operation, so hopefully this will be of use to some folks in that circumstance.
Can I Get A US Bank Account Without Residing In the US? This is easily the most frequent question on the Business of Software boards about banking. The short answer is yes. The long answer is “America didn’t become the world’s largest economy by saying no to greenbacks, and billions of dollars passes through millions of foreigner-controlled accounts every day. Forget what you’ve heard about the Patriot Act, if you’re not on a watchlist this actually isn’t that hard, provided you can find a bank which will let you.”
The key obstacle you’ve got to overcome is called Know Your Customer, a regulation that requires that banks know who they are doing business with (i.e. that their account holders are not fictitious fronts for Bad People). Many banks interpret that as meaning you need a branch visit, but that is hardly universal. Citibank, for example, will take a driver’s license number over the phone as sufficient for KYC. That doesn’t help you if you’re in Romania, of course. What does is banks which are controlled by a non-banking organization, such as E-Trade Banking, which is a financial services arm of an online brokerage. You can open an E-Trade investment account from just about anywhere. Then, if you call their customer support line and ask to have banking services added to your account, they’ll take the existence of your investment account as sufficient evidence that you actually exist, and you’ll just have to fax over a copy of your passport to get a checking account, check card, and online banking activated. E-Trade isn’t the only institution that will do this — many American brokerages have US accounts available worldwide, because one of the biggest reasons to have a US account if you are not US-based is to invest in US assets without paying an intermediary lots of money.
Got a recommendation for a bank for the rest of us?
Everyone wants different things in a bank. I like decent interest rates, good online banking, and easy access to ACH payments (Automated Clearing House — when you receive money from Paypal or pay bills online, that is what you are using). My top recommendation is ING Direct’s Electric Orange (its a checking account), for three reasons: Paypal and Google ACH payments credit within 1-2 business days, which means you get extra interest, you actually do earn interest on the checking account (3% unless you’re loaded), and they have a very responsive website. They don’t have branch offices but I could literally go the rest of my life without needing teller help for simple transactions. You need to have a checking account at a bricks and mortar (US) bank to open an Electric Orange account.
I also recommend that all uISVs get a credit card which pays cash back. There are a billion providers here, take your favorite. While I don’t recommend ever carrying a balance on your credit card, paying all of those recurring monthly expenses and software purchases on a credit card makes for easy record keeping, 1% off your expenses every month, and gives you some protection should a transaction go sour. If you’re using Paypal the Paypal debit card gives you 1% back, but you’d have to keep sufficient amounts of money in your Paypal account to cover all purchases, and that requirement doesn’t sit well with me.
Harry Potter Bingo Cards
In honor of the release of Harry Potter and the Deathly Hallows, I thought I would point out that there are some Harry Potter bingo cards (scroll down or search for Harry Potter) available for free for teachers, parents, or other Potter enthusiasts who want to use them. They don’t spoil any plot points of the books.
The book, by the way, took me about 8 solid hours to read and got me a little weepy at points. It has weak points and seems rushed by the end, with a few loose ends not resolved as definitively as I’d have liked them to be, but all in all is a fitting capstone to the series. I am indebted to Ms. Rowling for inviting us to share in the magic, and in the very real good she has worked for the cause of children’s literacy.
For other software small businessmen, don’t worry, regularly scheduled content will resume in about a week or two. In the meantime, there is a really good book out there if you want to take your mind off of conversion rates and SEO for a while.
Blogging Light Because…
… I have been absorbed in preparations for temporarily returning to the US, moving jobs, moving apartments, and etc. Try imagining the stress of planning a month-long vacation, a job hop, and a move at the same time — now add in the wrinkle that it is all done in a second language*. I will be back in the US on the 27th with my brand-new Dell laptop (on which I am writing this post) and about a solid month of time to hang out with the family and work on Kalzumeus. Then it is back to the daily grind, this time at a OSS-based computer consultancy in Nagoya at a decently higher salary than my last contract.
See you all then.
* Just when you think “Oh, it can’t be so bad, I am a qualified translator after all” Murphy’s Law says that the travel agent’s database will forget you exist, the landlord will try sneaking a rider onto page 8 of the contract to charge 10% extra, and the immigration bureau will erroneously tell you that their visa guidelines have changed to disallow your trip. Ahh well, all fixed now, although I will have to give my landlord a piece of my mind when I get back.
Bob Walsh Launches Consultancy
Bob Walsh, who literally wrote the book about uISVs, has opened up a software consultancy for uISVs with the suitably Web 2.0-y name 47hats. Not sure I would go for that name myself but, hey, not my business on the line. While I have occassional disagreements with Bob about the relative ranking of priorities for the uISV*, he has contributed a lot to the community and one more resource for uISVs trying to cross the chasm from $0 to $1 in revenue is always a good thing. (And there are plenty of chasms after that one, too.)
* Two examples: I think he places more emphasis on incorporation and legal documents than is warranted for many uISVs, and I think some of the recommendations he makes in his super-helpful series of website reviews for uISVs are based more on intuition than on data, and I suspect the intuition is flawed.
Speaking of his book: while I somehow managed to avoid reading it, my understanding is it would have shaved a heck of a lot of time off my first week of nailing down administrivia decisions like payment processors, bank accounts, hosting, etc.
Freeware Can Be Profitable, Apparently
I got an email from Rick Brewster the other day, fixing a spelling mistake on my website. Rick noticed it after a link from my blog, which he apparently reads and comments on, although I haven’t noticed it before. The reason this has a strangers passing in the night feel to it is that Rick wrote Paint.NET, a fairly powerful freeware image editing program which I am a major user of and contributed to, and so we have been unknowingly supporting each other’s businesses for months. Funny how things work like that.
Anyhow, he has an interesting post on the economics of completely free-as-in-beer software. Apparently, it is making him a fair bit of money, although is hesitant to disclose the exact figures. And, hey, that is certainly his right. If you’d like to see them, I suppose you could express encouragement in his comments.
As an amusing sidenote, he had some advice for me on what to do with my Bingo Card Creator profits:
That’s pretty good supplementary income which can then be used to pay down debt, increase retirements savings, or for the monthly payment on a very nice BMW. C’mon Patrick. Go for the BMW.
1) Did it already. Bingo Card Creator paid off my last bit of student loans in December. (I have an irrational hatred of debt and had paid essentially all of my surplus salary since graduation towards the loans. This is part of the reason why I was so big on starting the business on a shoestring.)
2) Doing it. Saving is my favorite use of money. What can I say, I’m a boring guy to shop with.
3) I actually don’t have a driver’s license where I live. If I did, while I’m sure the BMW is a nice automobile, I would get myself an itty-bitty used Japanese car for about $500, run it into the ground, and repeat. Like I said, I have an irrational hatred of debt. To the extent any of the Bingo Card Creator money gets spent rather than saved, I suppose you could say it helps pay for my plane tickets to visit my family and perhaps my new laptop. (My first laptop ever, as a matter of fact. Its a Japanese Dell, should be really useful for getting some work done on plane flights and, naturally, includes a better graphics card so if I fall off the MMORPG wagon I can do so in style.)
June 2007 Stats
Capsule Review: Easily my best month ever, and its summer vacation. I’m really looking forward to the start of the term in August.
Sales: 36 (1 refund, customer was unhappy with font sizing)
Gross Income (less refund): 918.25
Expenses:
SwiftCD $54
AdWords $49.27
GoDaddy $7
e-junkie $5
AdCenter $19.59
CrazyEgg $9
Paypal: $18.04
Total Expenses: $161.90
Net Profit: $756.35
Selected Web Stats:
Visitors: 8,400
Visits: 9,200
Free Trials Downloaded: 1,017 from my site, several hundred from other sites.
Known-good Free Trial Installs (clicked a tagged link from within program): 354
Trial to Purchase Conversion: ~2.5%
Visits to my Purchasing Page: 402
Percent of folks who purchased after reaching purchasing page: 9%
Biggest Coup This Month: Snowflake queries. I rewrote one page of mine, which had previously been very underused, to snap up more of them. Handily, that rewrite was completed on May 30th. During June, that page saw 5,600 page views (or about 27% of my total). During May, that was 2,700 page views, or 12% of my total. The “extra” 3,000 page views were a major part of the reason that, despite the fact traffic on my major teacher-related search terms declined since teachers are out of school, my overall traffic stayed mostly flat while my sales increased markedly. I can’t wait to get some time to write some more content and catch myself some more snowflakes.
Conflict of Interest: Payment Processors vs uISVs
I sometimes take a bit of guff from other uISVs for not using a “real” payment processor. Some folks believe Google Checkout/Paypal are “unprofessional” or “hobbyist”. I respect that opinion. However, if the recent events at SWREG are any indication, I’ll wear that amateur label proudly. They recently introduced a new upsell item in shopping carts of the uISVs they serve, and its one that makes one recall the many alternate definitions of the word professional.
Andy Brice has got the story covered and the BoS forums are buzzing about it, but in brief, SWREG has placed a button labeled Continue after the last page after the checkout funnel. If you click the button, you will be billed $9 a month to your credit card, silently, until you figure out who the heck is billing you and try to cancel. This is orchestrated by an outfit called Reservation Rewards aka WebLoyalty.com aka TravelValuePlus aka BuyersAssurance.com aka AnyoneWithSixDBAsIsTryingToScamYou.com. Theoretically, they send you coupons in return for your $9 a month. Many, many folks report never getting the coupons, never receiving a single of the multiple emails they steadfastly claim to send, and never having done the double opt-in gymnastics that they claim isolates people from getting locked into their service without wanting to be.
See, here’s the rub. There is a nice feature of the Internet that folks learn early: if you don’t give your credit card details to someone, they can’t bill you. Entering your credit card details is a signal both of major trust and of the fact that you understand that, absent you taking some action, you’re about to authorize forking over some money. WebScamInc could never get “millions of satisfied customers” to authorize the $9 for nothing purchase with their lack of service, so they piggyback on the trust the customer has in you.
And THAT, more than anything else, is what burns my biscuit about this. It is bad enough that a business would abuse their own customers enough to facilitate theft by fraud from them, and some large businesses did this quite often in the Wild West days of the Internet. What makes it particularly galling, though, is that a customer at SWREG is not SWREG’s customer — he’s the customer of some uISV somewhere who stays up nights toiling away writing emails, polishing web copy, and smashing bugs to earn the trust of people he has never met over the Internet. And what does the customer get for being foolish enough to trust him? He gets stabbed in the back by someone whose only purpose in life is to be a convenient CGI interface to a merchant account.
Oh, but it gets better. Over at Andy’s blog, Jessy from SWREG has this explanation of why they allowed a scammer to take up residence on their service. Its… well… here, read it.
Hello,
The offering is a perks offering for customers. In no way are they tricked into using this, and it is clearly disclosed what they are signing up for. The signup page looks nothing like the order form or SWREG clearly differentiating it from the product purchase.
Customers are also very easily able to cancel the perk offering at any time. They can choose to pay the fee and receive great discounts at very popular, well-known brands/stores within their country.
SWREG has made this optional for our clients. These are offerings used at Amazon and EBay, nothing new or out of the ordinary for customers.
If you have any questions please don’t hesitate to contact me.
Thanks,
Jessy
(Email address omitted by me.)
This is willfully obtuse. Yes, if you read every word on the SWREG order page, you will indeed realize that the 8pt font says you are submitting your data to a third party and authorizing them to debit your credit card. The 24 point font on the blue button, however, says “Yes. Click here now”. And SWREG, as an e-commerce merchant, should darn well better know that Internet pages are not made to be read. They are made to be scanned — readers evaluate, in a period of seconds, whether or not anything on the page has interest to them and then they drill down into that content, either by reading it or interacting with their interface.
A large block of small text font on a web page, placed against a blue button with a strong call to action, isn’t asking to be read. Its asking to be missed. It is exactly where any web site designer worth their salt would say “You know, if I put that in CrazyEgg or did a real heat map study, that area would be a deep blue dead zone. I sure hope the content writers don’t put anything important there.”
There is also the context to consider. This is important — if you are in the middle of a transaction, and you have already gotten over the mental “Give this vendor [i.e. the uISV] money” barrier, then everything from the start of the funnel to the end of the funnel reads Click next to continue. If that button had said, in 48 point font, “Click here to format C:\” I still could have gotten 5% conversion with it! Its like putting something on the second to last page of an installer — we all know that nobody reads anything, they just mindlessly click next until the application pops up or they are dumped to their desktop because our industry has trained them for decades that nothing they are about to see is important. That is why, when we design web applications, we put destructive actions behind popup confirmations, and we put really destructive actions behind things which are designed to jar the user out of their GUI induced fugue, like “Type d-e-l-e-t-e to drop the database”. Spending money is customarily put behind a similar speedbump, entering credit card details, and this scam is designed precisely to circumvent that safety valve.
Oh, but spending money isn’t necessarily destructive, as Jess points out. Maybe folks like the discounts they’re getting at a wide variety of establishments in their country, for the low, low price of $9 a month.
Tell me, do the one thousand, nine hundred, and seventeen customers who commented on just one of the “Reservation Rewards is a scam” thread sound like they are satisfied customers happy to have received discounts? Lets review a couple of these comments, shall we?
Daniel said
wow i cant belive this i just noticed these same charges on my account and only noticed because it made me overdraft in my debit account. i called the bank and they told me that it has been going on since july thats $54 that they have talken with out me knowing i have no idea where they got the info tho i always shop through paypal but makbe that is the problem all i know is that this needs to be stopped it is wrong.
Matt said
Thanks for putting this up. I just got off the phone with these guys. They claimed they “were making an exception to the rules” when they refunded 4 months worth of charges to me. I asked where they got my CC# and they claimed it was from ebgames.com, a site I sometimes buy stuff from. I’m filing a complaint with the Connecticut Department of Consumer Protection and will be taking the issue up with ebgames.com customer service and perhaps the Pennsylvania Bureau of Consumer Protection if that doesn’t work out well.
(You can feel free to add this to the SWREG defense: Well, if Reservations Rewards is good enough to scam ebgames’ customers, then it is good enough to scam ours!)
Don said:
I am currently serving in Iraq, have been for 4 months, and noticed that I have been recieving charges from WLI for $7 (am I a lucky one to get off so cheap?). I have gone to their webpage with an unloaded weapon—you see, you have a logon & password to see “your” account information. Beings I did not know I was a member, needless to say I do not have that info. So I e-mailed them my name as it appears on my credit card, told them to cease, desist & refund….. Hoping for the best.
You know what lack of capital letters, fractured syntax, and a certain lack of savvy about e-commerce reminds me of? Oh, yeah, a significant portion of my customers. (Even English teachers “let their hair down” when they are writing emails, sometimes.) Unlike any significant portion of my customers, these folks are howling for blood. And if you’re using SWREG, they are howling for your blood, because despite the fact that you are the little minnow and SWREG is the multi-million dollar corporation to the extent that anyone realizes you are in fact separate entities (and most don’t) the presence of SWREG’s website wrapped within a mere portion of your own makes it look like they’re working for you. And, hey, with them getting a sliver of the transaction, that is what the relationship really is.
Which is the problem from SWREG’s point of view. They can’t increase their cut of the transaction size, or you will flee to one of their competitors, or decide to go to e-junkie/Paypal. You can get a customer to purchase from you multiple times to increase your revenue, but that is only an option for SWREG to the extent that you stay one of their vendors. So they are constantly on the lookout for new revenue streams, and both aggressive cross-selling to your customers and selling them down the river to scumbuckets.com are apparently options on the table.
So, what to do about it? Well, if you’re not a customer of SWREG, great. Celebrate your good fortune… and give your e-commerce provider a jaundiced look and a quick assessment of whether they would ever stab your customers in the back. If they would, make preparations for your inevitable separation as soon as that provider makes the decision that your future loyalty is worth less than the amount they can extract out of your customers today.
I came very close to giving Google Checkout the boot once, on Earth Day. They proposed to cross-sell my customers into a $10 carbon offset. It wasn’t nearly this scummy — the carbon offset was clearly marketed as a separate item, it would have required another separate checkout process to buy, and of course the only reason you would actually click on a button saying Click Here To Buy a $10 carbon offset is if you wanted to actually buy an indulgence offset. Google’s saving grace was that they realized this was going to be controversial and offered me an opt-out. (It really should have been an opt-in. I have no strong opinions either way on begging for alms soliciting charitable contributions but impair your customers’ experience to do it, not mine. I don’t see any “Thanks for searching for flapjack recipes on Google. While you’re here, interested in buying a carbon offset?” cluttering up your famously minimalist interface.)
And if you are a SWREG customer? I think Tom Rath on the BoS boards said it best:
Now I need to spend the next few days alerting my customers of this con, apologizing profusely to those who found themselves roped into it, and write cheques to cover whatever expenses have been incurred by those foolish enough to trust my company’s judgment.
I don’t know what Tom Rath sells off the top of my head, but whatever it is, that paragraph makes me want to buy one on general principle. Those are the words of a man you can trust. That is the tone that we strive to strike as little honest fish in a stormy ocean filled with unscrupulous sharks trying to take a bite off of anyone doing business on the Internet.
And SWREG? Well, suffice it to say that the W in the name is looking like a dorsal fin to me at the moment. Duh duh, duh duh, duh duh duh duh duh duh…
Quick Favor From Mac Users
If you are running Mac OS X 10.3.9, could you please run on over to http://www.bingocardcreator.com, download the free trial, and see if you are able to run it? A user of mine is reporting a quirky Java error on that operating system but not on another OS X 10.4 box they have access to, and I’m trying to isolate whether it is their machine that has the issue or whether Bingo Card Creator has a hidden incompatibility with something on a particular version of OS X.
Happy Birthday, Bingo Card Creator
I launched Bingo Card Creator exactly a year ago today. It has been a great year, and I succeeded wildly beyond my expectations.
Bingo Card Creator is currently being used by over a hundred paying customers (an extrapolation from how many paid versions are pinging me for updates every fortnight). Over 270 folks purchased from me. The overwhelming majority of them are happy with their purchase, and every last person who wasn’t got a refund delivered with a smile on the same day.
Bingo Card Creator has been used to teach a six year old to read, run nutritional lessons for old folks’ homes, do icebreakers at retreats for a half dozen Fortune 500 companies, teach English to adult learners in China, put a little more colour and a few more u’s in the writing of Aussie schoolkids, and been put to the paces by many, many educators. My best estimate is that somewhere between 5,000 and 10,000 people played a game of bingo this year using a card printed on Bingo Card Creator. (And I saved American educators upwards of $20,000 relative to buying bingo cards by the set.)
Sales for the first year were a hair under $6,500. That wildly exceeds my original expectation/goal, which was about 10 sales a month (~$250). Costs are somewhere in the $2,500 region — you can take a look at this post for a month by month breakdown. My costs relative to sales have plunged over the last few months, largely a result of only having to pay startup costs once and the fact that I’ve finally gotten over the AdWords learning curve(s). Without giving away my day job salary, suffice it to say that while my standard of living is identical my monthly retirement contribution is hundreds of dollars over what it used to be. But the money was never my big reason for doing this.
In opening a company (OK: still haven’t filed that paperwork) I joined the quirky worldwide community of uISVs, centered around the Business of Software forums and elsewhere. I got a lot of good advice and, hopefully, managed to give a bit of it too. The folks who I owe thank-yous to are too numerous to list here, but suffice it to say that drinks are on me should you ever find yourself blundering around central Japan. Folks demonstrably appreciate real live sales numbers, small though they might be, and I’ve been contacted by three folks who said I inspired them to take the plunge. What can I say: its a bit of work, a lot of fun, and beats spending your time on World of Warcraft.
As for this year, plans are to finish up finding a job/moving/etc, which is consuming most of my time at the moment, launch Kalzumeus eventually, and continue constant tweaks and improvements on Bingo Card Creator. (I was tantalizing close to my $1,000 sales goal in June, which is almost disturbing since school is out for summer and my core market shouldn’t be buying now. This makes me cautiously optimistic for sales in August, when the new term starts.)
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