AppSumo is a popular website that offers deals on digital products. Many software developers see it as a great way to get more sales and users. But is it really as good as it seems? This article tells the story of a developer who tried selling their software on AppSumo. At first, things looked good. They made $15,354 from sales on the platform. But as time went on, the developer noticed some problems.
The developer found that AppSumo took a big cut of the money. They also realized that many of the customers weren't the right fit for their product. To make matters worse, a lot of customers asked for refunds or stopped using the product quickly. These issues made the developer wonder if the quick boost in sales was worth it in the long run.
By sharing their experience, this developer hopes to help other software creators make better decisions about where to sell their products. In this article, we'll look at each of these problems in detail. We'll see how they affected the developer's business and what lessons we can learn from the story.
The surprising commission rates
When the developer first decided to sell their product on AppSumo, they were excited about the potential for new customers. However, they quickly realized that the money they earned wasn't as much as they expected. The reason? AppSumo's commission rates.
The developer tried to find out exactly how much AppSumo would take from each sale, but the information wasn't clear. This lack of transparency was the first red flag. After talking with other developers, they learned that AppSumo might take as much as 70% of each sale. This means that for every $100 a customer pays, AppSumo could keep $70, leaving only $30 for the developer.
To understand why this is so high, let's look at what's normal in the software world. Most companies that help sell software take between 20% and 30%. Even the most expensive ones rarely ask for more than 50%. The developer's own affiliate programs, where other people help sell their product, paid about 50% more than the average.
When the developer did the math, they were shocked. Out of the $15,354 in total sales, if AppSumo really took 70%, that would mean AppSumo kept $10,747.80. The developer would be left with only $4,606.20. That's less than a third of what customers paid.
This high commission rate makes it very hard for developers to make money. They still have to pay for things like hosting their software, fixing bugs, and helping customers. With such a small part of the sale price left, it's tough to cover these costs and still have money left over.
When bargain hunters become customers
The high commission wasn't the only problem the developer faced. They also noticed that the customers they got through AppSumo were different from their usual customers. These new customers were more interested in getting a good deal than in using the software for its intended purpose.
AppSumo is known for offering big discounts. This attracts people who love finding bargains. While getting lots of new customers might seem good, the developer found that these bargain hunters often caused more problems than they solved.
Many of these customers bought the software without really understanding what it did or if they needed it. They were excited about the low price, not about the product itself. This led to a lot of issues. For example, these customers often asked for many new features, hoping to get a tool that does everything for a very low price. This put pressure on the developer to add things that weren't part of their original plan for the software.
Another problem was that these customers needed a lot of help. They often didn't read the instructions and asked many basic questions. This meant the developer had to spend a lot of time answering simple questions instead of improving the product.
The bargain hunters also affected the community around the product. Instead of having users who were excited about the software and wanted to help it grow, the developer found many demanding customers who were never satisfied. This made it hard to build a positive community where users could help each other and share ideas.
The developer shared some numbers that show how big this problem was. Out of 210 sales, 71 people asked for their money back. That's a refund rate of 33%, which is very high. Usually, good software has a refund rate of less than 10%. This high refund rate showed that many people were buying without really wanting or needing the product.
AppSumo marketplace product
The problem of disappearing customers
Another issue the developer faced was that customers from AppSumo didn't stick around for long. In the software world, keeping customers (what's called "retention") is very important. It's not just about getting lots of new customers; it's about having customers who keep using and paying for the software over time.
The developer noticed that many AppSumo customers either asked for refunds quickly or stopped using the software after a short time. This is a big problem for several reasons.
First, it makes it hard to plan for the future. If you don't know how many customers will stay, it's difficult to know how much money you'll have to keep improving the software. Second, the developer spent a lot of time and money helping these short-term customers, but didn't get much benefit from it. These customers didn't stick around long enough to give useful feedback or tell others about the product.
The high refund rate (33%) was a clear sign of this problem. But even among those who didn't ask for refunds, many probably stopped using the software quickly. This is like having a leaky bucket - you keep pouring in new customers, but they keep flowing out just as fast.
This "churn" (the rate at which customers leave) is bad for building a strong product. Long-term customers are valuable because they really understand the product and can give good suggestions for improvements. They're also more likely to tell their friends about the software, bringing in new customers who are actually interested in using it.
When customers keep leaving quickly, it's also hard to build a good community around the product. A strong community can be a big help for a software business. It can reduce the work for the developer because users help each other. It also makes the product more valuable because people want to be part of the community.
Building a business that lasts
After experiencing the challenges with AppSumo, the developer realized the importance of building a business that can stand the test of time. They understood that quick sales aren't always the path to long-term success in the software world.
A lasting software business needs more than just a lot of one-time buyers. It needs customers who stick around, use the product regularly, and are willing to pay for it month after month or year after year. These long-term customers are incredibly valuable for several reasons.
First, long-term customers provide a steady income. When you know how many customers you'll have from month to month, it's much easier to plan for the future. You can make better decisions about hiring new team members, adding features to your product, or investing in marketing.
Second, these customers usually need less help over time. As they use the product more, they become experts. This means they don't need to ask as many questions, which saves time and money on customer support.
Third, long-term customers often provide the most useful feedback. They use the product a lot, so they really understand its strengths and weaknesses. Their suggestions for improvements are usually more helpful than those from people who've only used the product for a short time.
Fourth, happy long-term customers often tell others about the product. This word-of-mouth marketing is very powerful. New customers who come through recommendations are often a better fit for the product and more likely to stick around themselves.
Lastly, a group of long-term customers can form a strong community around the product. This community can be incredibly valuable. Members can help each other, share ideas, and even create add-ons or extras for the product. A strong community makes the product more valuable to everyone who uses it.
The developer realized that to build this kind of lasting business, they needed to focus on attracting the right kind of customers from the start. Instead of chasing after bargain hunters, they decided to look for people who really needed and valued their product.
This might mean growing more slowly at first. It might mean turning down opportunities for quick sales if those sales would bring in customers who aren't a good fit. But in the long run, this approach leads to a stronger, more stable business.
The developer also decided to put more effort into keeping their existing customers happy. This meant listening to their feedback, continually improving the product, and providing excellent customer service. While this takes more work than just making quick sales, it pays off in the form of loyal customers who stick with the product for years.
Conclusion
While AppSumo did deliver on its promise of increased sales, the hidden costs and long-term consequences outweighed the initial benefits for this developer.
On the positive side, AppSumo provided exposure to a large audience and generated a significant number of sales in a short period. For a new product looking to gain traction quickly, this kind of boost can be appealing.
However, the costs were large. The high commission rate meant that the developer kept only a small portion of the sales revenue. The influx of bargain-hunting customers led to increased support demands and a high refund rate. Perhaps most importantly, these customers were less likely to stick around long-term, which is important for the sustained success of a software business.
For software developers considering AppSumo or similar platforms, it's important to carefully consider your goals and the nature of your product. If you're looking for a quick influx of cash and are prepared to deal with the potential downsides, it might be worth trying. However, if you're focused on building a stable, long-term business with a loyal customer base, other strategies might be more effective.
