January Is Being Good To Me

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.

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Tax Time!

Hey, I’m jet-lagged and getting an early start.  It looks like I had $2480.05 of gross income on my Schedule C-EZ (thats where you put stuff for a sole proprietorship, for those not accustomed to US tax returns).  That is a fairly exact figure (check Paypal and eSellerate records).  Expenses I’m still working on, pouring over credit card statements and Paypal transaction logs looking for additional things to claim.  Some decisions I made, so you can giggle at how much penny pinching I do and realize how you can come to great tax savings if you keep copious records:

Winzip license: Deductible.   All of my use this year (yep, I made sure) was in opening and closing BingoCardCreator.zip.  For personal use I used the built-in Windows functions.  $29.95 (saves $4.50 in tax!)

Japanese training software: Not deductible.  While I got a blog entry about it it wasn’t incurred as an advertising expense and I don’t think I can fairly say it was training for my business (deductible) as opposed to training for my employment or personal edification (not deductible).

Sharebuilder.com account: Not deductible.  While it would have been lovely to get this one ($100+ expense) “my” accountant (a high school buddy who just passed CPA exam and was happy to brag about it over Christmas — hey, I’m cheap) says that even if you invest your business profits it is considered a personal expense.  He says if I go legal and have the business do a 401(k), SEP, or something similar, however, that costs involved in starting up those would be deductible.  Good to know.

High speed Internet: Not deductible.  While I doubt they’d audit little old me I have a level 60 gnome mage who would argue violently that the 50MB/s connection I pay for is not business related.  (Sidenote: good thing I don’t have to declare DKP as income.)

 Robosoft: Hella deductible.  I had totally forgotten about this expenditure until I was browsing my blog’s “stats” category looking for stuff I had missed.  $99 expenditure = $15 tax savings.  Not bad for 2 minutes of work. 

Things I did end up deducting:

CPC ads from Google and Yahoo, TextLinkAds, Winzip license, Stuffit license, RentACoder fee for Mac port, Paypal commission, BitsDuJour commission, cd-fulfillment.com costs, Robosoft, and refunds to customers.

I’ll give you the birds-eye view of my Schedule C-EZ when its over with.  I would show you how it fits in the 1040 except its not likely to be useful to most of you (how many folks make most of their income from an excludable foreign source?) and I’m not comfortable waving around my salary numbers for the day job.

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So For Those Of You Investing Your Profits…

… 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.

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Merry Christmas part 2

Well, I just woke up on the 26th and checked my mail, and it seems I’ve now sold 100 copies of Bingo Card Creator on the dot (since launching the program — not, regrettably, since December 1st).  Yay.  Aside from being great fun and a nice learning experience, thats about $1500 or so that I wouldn’t have had otherwise.  Not a shabby bit of money, as my newly paid-off student loan can attest.

Its not quite New Years yet but I thought I’d go ahead and set some business goals for the New Year:

1)  Release BCC v1.05 sometime in the month of January.  On the list of stuff to accomplish:

  • Fix minor printing niggles when you only have numeric “words” on the card.
  • Add Halloween/Christmas bingo to get ready for next year (low priority).
  • Improve printing of word lists to allow more than 25 words on them (done already on local machine).
  • Give option for advanced users to select printer (done already on local machine).
  • Make sure its Vista compatible.  This will probably involve changing on Windows boxes where I drop the serial key, user name, and timestamp for the last program update.  Oh, and I should move the document folder to My Documents, too.
  • Let people put in column headers (B-I-N-G-O or configurable).
  • Option for headers/footers, at least for single cards on a page.

2)  Retool the website.

  • Improve purchasing.htm so it makes the sales presentation better.
  • Eliminate eSellerate.net.  I have yet to be paid from a single sale from them, due to low volume, and having the option there when no one uses it needlessly complicates things.
  • Create a version (or versions) of the website which broadens the niche a wee bit from teachers.  Most of my search traffic these days is coming in for bingo stuff rather than teaching stuff, might as well oblige them.
  • Resume some content-writing SEO activities.
  • Blog some stuff of use to folks, out of my totally charitable desire to collect free links improve the sum of human knowledge.
  • Spend some time reaquainting myself with Adwords and AdCenter to see if I can’t squeeze a little more juice out of the turnip.  In particular, AdWords is still at $.40-$.45 a conversion and I want to fight that down to $.30 again.

3)  And some financial goals:

  • $1,000 a month in sales by April
  • Yearly sales of $10,000.
  • Maxxing a Roth-IRA from self employment (I am not eligible for any IRA normally as I don’t pay taxes in the US due to the Foreign Earned Income Exemption.  Incidentally, if you are a US taxperson, you run a uISV as a hobby,  and you don’t have an IRA, for the love of all that is holy fix that this year.)
  • Get legal in Japan (I am so NOT looking forward to those forms) and at least one American state.  The Japanese taxman “Oh, thats just a hobby, don’t worry about it” immunity phases out at 1 million yen (at 120 yen to the dollar thats about US$8,300) and I’d like to have stuff squared away by then.  Additionally, a legal entity in the US for my software company will make launching a more amibitious product much easier.
  • A wee bit more robustness from sales when the teaching market isn’t in a buying mood (wait a few days for my December stats, you’ll see what I mean).  In particular, I don’t really want to see income drop to $0 over the summer months (particularly because I have a move coming up in August and won’t be able to save as much from my day job as I usually can).

Other stuff:

  • Locate a new day job by August.  My contract on the current job is expiring and while its been a wonderful three years its time to part ways.  My current thought is employment somewhere in the Nagoya area.
  • Start a new, more ambitious uISV project.  I’ve got a thought for one at the moment but am wondering if the market is big enough (think “consumer finance” and a ticket price, uh, a wee bit above $24.95).
  • Continue search for Ms. Right.
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Merry Christmas!

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.

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November Stats

Yeah, I know, I’m a wee bit late on these.  But on the plus side my project at my day job is close to three months late, so if you grade me on a curve I’m almost two and a half months early… or at least thats the math I try to use with my manager.

The same disclaimers apply as every other stats post.

 Summary: November was a bad month for sales, principally due to Thanksgiving I think (I got essentially nothing after the 20th.)  December I also predict is going to be terrible.  I’ll cover the Google costs but not much more.

 Sales: 20(+ 1 refund — customer ordered twice)

Gross Sales: $499

Net Sales After Paypal: ~$479

Expenses:

GoDaddy: $10

e-junkie: $5

Google AdWords: $90

Amigo: $25

Net Expenses: $130

Net Profit: $349

 I don’t think I ever commented on how Amigo turned out for me.  Well, to put it mildly: not well.  I finally was successful in getting newsletters to take my ad after Carson Systems started promoting Amigo heavily (incidentally, this was AFTER I had forgotten about it — must remember to cancel such things in the future).  Unfortunately, there is no geotargetting or language targetting in Amigo, and I only received clicks from principally two large Spanish (i.e. the country, south of France) newsletters.  They don’t play bingo in Spain.  Average time spent on site by those visitors: 3 seconds.  My advice, and I have the utmost respect for Carson Systems and was very impressed that they actually sent me a mail inquiring about my experience when I put in a feature request for targetting, is to stay away from this service for now.

OK, time for some website stats.  You are going to notice these are substantially above normal — I recently started ranking for some very common queries on Google (including for bingo cards , which gets some SCARY search volume relative to the Long Tail queries I usually rank on) and as a result the amount of traffic I have from Google is literally double what it usually is.  I don’t know if this will be sustained (hope so) or if this new traffic will eventually convert to sales (hope so), but I’ve seen the increase in downloads and update requests I would expect from it being legitimate traffic.

Visits: 4,700

Average: 2.25 views per visitor

Major referrers:

Google (organic): 1,600

Google (AdWords): 750

Direct: 750

MSN: 465

Yahoo: 300

this blog: 180

Every other site (BoS, download sites, pirate sites, teacher forums, etc): <100 each, 600 or so in aggregate

Conversion Rates:

Google (organic): 16% (my lowest conversion — not suprising as some of the recent search terms are not exactly targetted traffic)

Google (AdWords): 29% (remember, Analytics overstates this — I think the true number is about 25%, mostly because I focus on CPA like a maniac)

Direct: 21% (not bad, not bad — and remember, an additional 20% of them followed the update link from within the app so you wouldn’t expect them to need the trial download, so the true CR is closer to 25%)

MSN: 19%

Yahoo: 21%

In historical terms, I consider visitors-to-download conversion of 20% to be acceptable and 25% to be my goal.

Downloads:

My site: 890

Offsite: Uh, clueless, sorry.  I’ve got no desire to spend enough time to grep for this data today.  I’m going to go out on a limb and say its probably about 500-800.

Confirmed Successful Installs: 225 (Customer opts in to a “check for updates” from within the app)

Estimated Trial-to-Purchase Conversion: 1.25% to 1.5%  Some uISVs would consider this successful.  As stated, for me, this month was a bit of a disappointment.  I would feel better about that number if it were in the 2% region somewhere.  It is possible that if Google continues sending me weakly qualified visitors relative to my usual focused traffic that I may have to adjust to the reality and lower my expectations.

Conversion Given That Customer Has Entered The Funnel: In excess of 60%.  Ahem, booyah.  There are some major merchants who would die for a 40% cart abandonment rate.  I like to think this is because I keep the process as easy as humanly possible (enter your info, click confirm, congratulations you’re done) and use a name which is quite trusted in my market, Paypal.

Fun Navigational Trivia: You may want to take a look at my purchasing page to make sense of this.  All of my customers this month who purchased purchased through Paypal.  I’m going to tell you what exactly they clicked on the page to get to Paypal, and what I can essentially count on earning for any given click on that interface element (i.e. rate of conversion * sale price).  In order from most popular to least popular:

  1. The sidebar “Purchase Now $24.95″ button.  Expected Value: $5.98 
  2. The words “Purchase a single copy”.  Expected Value: $15.95
  3. The credit card button directly adjacent the “Purchase a single copy” hyperlink.  Expected Value: $5.98
  4. The credit card button following my paen to Paypal’s security.  Expected Value: $11.97

I wouldn’t draw any very deep inferences from 3/4 since they’ve got very, very low sample sizes.

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Got Invited To Beta Google Split Testing Product

I applied for this about a month ago and promptly forgot about it, but I got accepted today into the beta for Google’s split-testing product, Website Optimizer.  I don’t have the time to invest this second into working on it, but it will be part of my next big round of business improvements (half of my Christmas break will be spent on my lonesome in Japan, so I’ll have a few days to crank out a new version and start some New Year’s marketing efforts, including split testing the heck out of stuff).

Split testing, for those that don’t know the term, is taking a page you have (for example, www.bingocardcreator.com, the place folks are most likely to enter my site from) and making an A version and a B version.  A and B differ by some minor respect — for example, in A I might have the current download button and in B I might nix that download button and go for something green.  Then, here’s the magic, you randomly flip for every prospect that comes to your website for a certain period (say, 2 weeks) and hand them A or B.  You then measure the effect this produces on conversion.  For example, if B converts 2% better than A then I make that change permanent.  Then I start optimizing the text, the title, the … you get the general idea.

I haven’t ever performed true split testing before (unless you count AdWords, I suppose) — generally, when I do an experiment it means hoping that my website is stable for a week other than the thing I’m experimenting on.  That is a dubious proposition in the best of times — a sudden surge of crackers can throw your conversion way off, for example, which means you either get to throw out the data for the week and start over or just make a “best guess” that the new version “feels” like it converts better or worse than the old one.  I hate guessing and love data.  Thus I’m hoping Google delivers a useable and useful product here.  I’ll post impressions when I have them.

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I Am Oddly Motivated By Free Money

I read (through the indispensable PlanetMicroISV‘s feed from WorkHappy) that Microsoft wants YOU to set up an account with adCenter this Christmas.  So much that they’re prepared to stuff $200 in your stocking (in credit, naturally) if you fork over the $5 opening fee.  Ho ho ho, does that sound tempting.  I categorically refuse to use YSM again (“Like AdWords, except inferior in every way — price, performance, features, reporting, and workflow”) but maybe MS can separate me from some of my money.  I think I’ll give them 4 months at $50 a month or so to see if I can get positive ROI.  If yes, they get kept for the long term.  If not, its an experiment that costs me a cup of cocoa.

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Nice To Hear About Successes

If you haven’t seen it yet, I highly advise reading about how Printer Friendly made an absolute killing when it was featured by Bits du Jour.   

Quote:

Bits du Jour rocks! It simply does. I love business relationships where all sides win. It’s simply beautiful.

I’m glad for Andrey and for Ellen (who runs Bits du Jour).  While I didn’t have a day to set the world on fire when I was featured it was still a good experience and I could definately see the potential for the business model to work with an application with more mass-market appeal.  Printer Friendly appears to have hit the sweet spot.  Congrats to both for a well-earned success. 

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Things You Shouldn't Worry About

There is so much you have to understand as a uISV. You’ll be wearing a couple dozen hats — search engine optimizer, marketer, blogger (you’re marketing, right?), tech support, customer service, webmaster, accountant, payroll, banker, purchasing, etc etc for quite a while (until you no longer need the role or decide to outsource it). Oh, and I hear there is some development involved too. With this many things on your plate, you can’t afford to spend time worrying about irrelevancies. Yet a lot of people get caught up with them, and they’ll happily munch your time without providing any return.

I’m going to say some controversial things in the following paragraphs. This might be a helpful time to point out that, again, this advice is specific to my experience and circumstances as a very, very little fish selling to customers. If you sell $1 million custom installations to three-letter agencies you will probably want to disregard this advice.

Your license terms are mostly irrelevant. In the consumer market, nobody will read them anyhow. (.2% of my site visitors find license.htm — 25% of them buy, incidentally) They’ll use the software in whatever fashion the software permits itself to be used, regardless of whether you say you need to buy two copies for a husband and wife (hah, never going to happen) or two copies for a laptop and a desktop (hah, never going to happen). Similarly, the actual wording of the license will only be important if you attempt to enforce it against someone. That requires you paying a lawyer a very large amount of money on an hourly basis to recover a very small amount of money, which you will probably not even see at the end of the day. So why on earth would you go ahead and consult a lawyer about your license terms — might as well take $1,000 in small bills and burn it as incense. Instead, you have two options. One is copying the license verbatim from a product from nolo.com. The other is writing the license yourself (I did this). “Oh no, I could get sued!” Do the reality check — the vast majority of commerce you participate in, day in and day out, is governed by no contract more formal than an oral promise or a handshake. If you are selling a product directly to a customer, you’re very similar to McDonalds. Do you know what the terms and conditions for your hamburgers are? No, because there are none. There was no contract signed when you got your car cleaned this morning, when you picked up your laundry yesterday, etc etc. Yet somehow these industries manage to muddle through despite there being lawyers lurking around every corner scrutinizing software licenses for an improper use of legal jargon. Whereas.

No competitor cares about your code. I understand that every programmer thinks their code is their baby. Here is the thing about babies: while most people absolutely love their baby they’ve got negative a billion desire to have anyone else’s baby. Supposing your code has some secret sauce in it (and it probably doesn’t — 99% of programming in most fields is pretty pedestrian), integrating your secret sauce with someone else’s product in a similar field is riskier and more expensive than just developing the secret sauce from scratch. Every time I see someone say “Uh oh, I need to obfuscate my code to keep it from competitors” I want to cry on the inside. Your primary line of defense against that is trusting your competitors (you trust random prospects on your website, why wouldn’t you trust folks who are your professional peers) and your secondary (and much, much, much less cost-effective) line of defense is asking your lawyer to send somebody a nasty letter. A determined effort to reverse-engineer your code, on the other hand, will succeed no matter what defenses you employ against it… not that any legitimate company will make that effort.

Nobody is going to try to sell your application as their own. This is another worry which keeps programmers up at night. Reality check: 10% of this business, on the outside, happens in the IDE. The other 90% is where you make your money. It is not efficient to steal someone’s code and then rebrand it, because you have to do the other 90% just as well as they do, and you’re naturally less than efficient at that. This is why the only folks who habitually decompile anything, pirates, only care about stripping out your copy protection so they can distribute your product for free.

You can pretty much ignore your competitors. The market in your niche is much, much larger than you can comfortably absorb by yourself (if it isn’t, find a new niche, now). Most potential customers will not learn about every bit of software in the space because that takes time, dedication, and expertise. Your customers lack these, which is why they want to pay you to make their problem go away. Matching every feature of your competitor just because they are there, or worrying about your release schedule because a major competitor is getting ready for a +=.01 version upgrade, is the height of folly.

The IRS isn’t really that scary. The overpowering fear of the taxman many small businessmen seem to have is irrational. (You may live in a country where it is rational. See bit above about this advice being controversial.) Many, many people in the US are involved in various economic activities which don’t quite fit into the W-2/1040EZ paradigm, and the vast majority of them are not being audited, fined, or imprisoned in any given year. Don’t totally ignore your tax implications, obviously, but I would not obsess about them the way some people do — after all, you need to make money to have any tax implications. I’ve seen some folks say, with apparent seriousness, that if you sell $200 worth of software in a year and aren’t incorporated with an accountant your state will lock you up and throw away the key for sales tax evasion. If that were the case, eBay would be the largest collection of jailbirds in history.

Back in real life, your state and national government likely have free resources available to figure out exactly how much tax you owe and how to pay it. They produce simple, easy to understand pamphlets and they have covered the uISV situation before, probably in two pages or less. (Example: Wondering whether you owe sales taxes on software in Illinois? By Jove I think they’ve answered that question before.) Give them a quick call, ask for the appropriate pamphlet, and they’ll happily send it to you because, hey, when you succeed they make money for doing nothing. They are emphatically not trying to bury a landmine in the forty-second codicil to the thirteenth annex of subchapter six of the internal revenue code so they they can make their quota of small businessmen busted this year. (After you have significant revenues, I think hiring a professional to do your taxes and/or your accounting is a good use of money, because the alternative is a poor use of time, and you ideally have a lot of the former but little of the latter.)

Your choice of programming environment doesn’t matter a whit. Pick whatever you, personally, are productive in. You can debate the merits of having garbage collecting or strong typing all day long, but in my entire professional career I have never seen debating compile successfully. The amount of time you will spend programming relative to your other tasks will be tiny, and deployment concerns for runtimes are almost invariably overblown. Several free install programs such as NSIS will happily let you slurp down the installer for .NET or the JRE or whatever if you get one of the (very, very few) customers who does not yet have this installed on their machine.

Worry about what really matters — figuring out how to sell a quality product to the right customers in numbers sufficient to achieve whatever your financial goals are.  Don’t fall for the time-wasting bogeymen.

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