Say "shareware" to
most executives at commercial software firms, and they think
of adolescent programmers pushing free or $19 software — inconsequential,
bug-ridden utilities or games — out to masses of consumers
for fun and very little profit.
Well,
we're here to tell you: It's time to rethink shareware.
Myth
#1: Shareware isn't for serious software businesses.
First of all, when we say "shareware," we're talking
about a marketing method, not a business model. Lots of very
commercial, very profitable, very business-like software companies
successfully use the shareware technique to get their product
into the hands of prospective users.
"There's
a big misconception about what shareware is," says Dave
Collins, CEO of U.K.-based software marketing firm SharewarePromotions
Ltd. "It's simply any variation on the try-before-you-buy
model.
"One
of the big myths is that shareware is outdated — that's
it's small scale. In my opinion, that couldn't be further from
the truth. Some of the biggest firms use it — Symantec and Microsoft and WinZip,
to name just a few. You won't find the word 'shareware' on their
Web sites, but they have trial versions available, and this is
precisely what the shareware model is."
"Nothing
sells your software better than itself," says Sharon Housley,
VP of marketing for software developer NotePage in
Hanover, Mass. Housley's also on the board of directors of the Shareware
Industry Awards Foundation (SIAF), the governing board for
the annual Shareware
Industry Conference (SIC).
"Shareware
builds trust with your customer, in that you're willing to let
them use it, try it." she says. "Besides, if you don't
do it, your competitors will."
Myth
#2: There's no money in shareware.
Again, shareware is a marketing method, not a giveaway scheme, and as a marketing
scheme there's plenty of evidence that it does work. In a nutshell, if you
can use shareware to convert leads into sales, there's tons of money to be
made.
"I
see two-person companies that are getting four million downloads
a year," says Phil Schnyder, president of askSam
Systems in Perry, Fla., who just returned from the SIC in
Rochester, N.Y., an event attended by 400 people. "This
one developer started out doing a game that they let people download
over the 'Net, and now they're in Wal-Mart and
getting big bucks."
Housley
offers another example:
"Marshall
Magee is one of the first to make over $1 million in a single
year on the shareware model. In his SIC presentation, he said
that he first stuck his Automenu program for DOS up there for
free — this was back in the days of BBS — and someone
offered him $20 for it.
"Marshall
hesitated, and the customer asked if $20 was not enough. Marshall
said, 'No that's plenty,' but asked for a check so that he could
show his father that's there's money to be made in software.
In his second year, Marshall's sales were $2.5 million. In year
three, they were $10 million.
Myth
#3: Shareware software is low-quality and often simplistic.
" Ours is complex software," Housley says. "It's high-end network
software. When you offer shareware, you create docs that are as easy to use as
possible, you create slide shows, you create Web demos. To say that yours is
too complex for shareware is just an excuse."
"To
some, shareware has a negative connotation of low standards and
amateurism," Collins says. "But you don't have to use
the word to adopt the marketing method. The word 'shareware'
has no relevance to the users. It has about as much relevance
as knowing the make of the drill that the dentist uses in my
mouth.
"In
fact, companies using shareware model are much more responsive
to the needs of their buyers. If there's a missing feature, evaluators
point it out immediately, and small developers can implement
those changes or additions relatively quickly."
Myth
#4: Shareware only works for low-cost products.
" The price tag can be anything at all," Housley says. "Ours goes
up to $2,000." Schnyder says his average initial sale is around $500, "but
some of those come back and order 30 copies" — which is a perfect
example of the shareware model hitting on all cylinders.
It's
probably true that if you offer only a $50,000 license, you'll
have a harder time getting mileage out of shareware — but
that's a comment on your sales model, not on software complexity
nor price.
In
short, if your sales model requires a sales rep to make an in-person
call, you're likely to get less bang for your buck from any try-before-you-buy
model, whether you call it shareware or pilot programs.
If,
on the other hand, most of your sales process occurs over the
phone or the Internet, shareware can expand your reach and increase
your close ratio.
Within
specific vertical niches, those close rates will make your head
spin: Housley says that the industry average for purchases from
shareware downloads is around 1 percent, but NotePage consistently
closes 10 to 20 percent. And among those who call in to get an
activation key code that unlocks new software features, 70 to
80 percent end up buying.
Keep
in mind, NotePage is making those sales without a sales rep ever
touching the deal.
OK,
with those primary myths out of the way, let's get into tactics:
How can you make the shareware model sell for you?
Tip
#1: Put a time limitation on your trials.
" The proper amount of time depends on product," Collins says. "If
it's complicated, say a network management application, the longer the better — 60
days wouldn't be too long. If it's a consumer app, say a registry cleaner, the
standard is 30 days."
Schnyder
offers a 30-day trial of his database product. "Some are
moving to a 14-day, but I think it's app-specific," he says. "If
the user has to put data in, then you need to go longer. But
if it's something like a spam filter, then it's best to keep
it shorter."
Tip
#2: Limit the functionality of your trial version — with
great caution.
" The restricted features could be that users can't save files, or can't
output to a printer," Collins says. "The advantage to this is that
you're not giving too much away; your risk is lower. The negative is that there
are often workarounds. For example, the user takes a screen shot of your product,
imports into Paintshop Pro, and prints from there."
For
most business applications, there's a much bigger risk than security:
frustrated users. If your constrained trial doesn't show them
what they need to see, they'll look elsewhere.
"It's
a big mistake to limit the shareware version too much," Schnyder
says. "You should really let people try the product. A trial
version that's too constrained just annoys them — a lot
of people are turned off by that; they really do want to use
your software and try it out."
"It's
very difficult to strike the right balance," Collins says. "If
you take too much away, you might not dazzle the user."
Tip
#3: If you limit functionality, make the full functionality
always visible.
For example, in your trial version you show all the features
and options, but gray out the menu selections for those that
are locked."
Many
other limits are possible, of course: for example, the number
of users, systems, or startups, or the size of database.
"One
person at the SIC said he allows trial users to print, but puts
a watermark on the output," Schnyder says. "Some people
in the audience thought that made sense, others didn't. I think
it depends on what feels right for you."
Tip
#4: Don't combine the trial limits without an escape clause.
Generally speaking, it's a bad idea to limit functionality and time, but NotePage
offers a clever in-between: Anyone can download a trial version, but the functionality
is limited until they contact the company for a key code.
"We
put a limitation in the software that allows the user to understand
how it works," Housley says, "and we will give them
a temporary key code makes it fully functional for 30 days — but
the customer has to come to us for the key code."
This
serves an obvious purpose: You can be liberal with your initial
trial downloads, because all those who sign up with Mickey Mouse
addresses can't get a fully functional version until they provide
you with some reality-based information. But if you ask for too
much at the outset, you'll scare away all the fence-sitters.
The NotePage approach is a nice, non-invasive compromise.
Tip
#5: Don't obsess over code crackers.
" I don't view the crackers as a lost sale," Collins says. "They
were never going to buy it anyway. In general, if someone is impressed with your
software, they'll buy it at a reasonable price. Crackers and hackers think all
software should be free.
"Your
protection mechanism should provide a level of reasonable precaution.
It shouldn't be too easy for someone to get it, but you have
to accept that no matter what you put in place, it will be cracked
if someone wants to crack it."
In
the b-to-b world, Schnyder doesn't think it's worth worrying
about. "If we find a key somewhere on a site, we'll try
to remove it," he says. "But we sell mostly to business,
and it just doesn't happen there. It's the guys selling game
software that really have to worry about that."
Should
you build or buy the license security scheme? Collins says you
should build it yourself if you have the resources available,
and if you have some experience building license control software.
However, for most software companies those are two very big "ifs."
Our
own opinion: Go to a third-party vendor, and look for one who
charges only when you make a sale. Yes, over time this may cost
you more than an upfront license, but you don't pay until someone
else pays you. And it's a lot cheaper than trying to build and
maintain code that's outside your area of expertise.
Tip
#6: Let the initial downloads go without barriers.
One of the side effects of the proliferation of spam and attacks on privacy
in general is a stronger-than-ever distrust of invasive questionnaires. Just
a couple years ago, we counseled that it's OK to ask for name and e-mail address,
but risky to ask for phone number and address. Nowadays, asking for anything
at all can get you in trouble.
"We
don't require that you fill out our questionnaire to get the
download, and we do no validation," Schnyder says. "It's
so easy to type in donald@duck.com, and I don't want to sift
through those. Still, we get information from over half who download."
"I'm
against getting an e-mail address — it's a bad idea," Collins
says. "One of the big paranoias among all types of users
is privacy —and it doesn't matter if you have a privacy
statement on your site. An e-mail address is a commodity; if
they have to provide it, they want to be paid.
"You
want to push the download, and then let the download push the
sale. Whoever gets in there first wins — and that's especially
true for b-to-b software. The company that makes it painless
and easy to get that software in the hands of the user will stand
head and shoulders above the rest.
"The
reality is, users are going to find something that does what
they want, and if it isn't too difficult, they'll stick with
that one — it's rare that they'll simultaneously research
and compare and download four or five applications. RFPs are
false; by the time that goes out, they already have a front-runner.
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