Software applications (a.k.a. apps) have become increasing popular with the proliferation of applications for smart phones. Parallel to this, an industry has grown up around the ways of distributing digital products. The following guide details the main options currently in widespread use. Each approach has benefits and constraints relating to security, control, and cost that will either suit or not suit some authors and publishers.
Sales/Download Management & Distribution Software
This business model facilitates an independent approach to sales that will be preferable to many developers. In this model, the app owner installs the application to handle sales and digital downloads on their own web server. This way, they can be in full command of their own shopping cart, download link security and customer data. There are many open source and commercial versions (such as DLGuard) available that are already in widespread use. Historically, this approach came first on the Internet as developers sold their products via their own sites. With time, third party distributors started forming online to promote and sell thousands of products from a central location.
The big advantages to the author is the opportunity to capture customer mailing list data combined with the ability to control the marketing and security of how their product is perceived and accessed online.
The cost of such an approach includes the ticket price on the sales application (though free open source versions are available, and widely used), the commission to the payment processor and the human resource cost of installing and administering the sales app.
Third Party Vendors/Distributors
This is the most widespread and familiar approach to most people as the prime example in today’s marketplace is Apple’s app store. It is also the model used for distributing other free/open software, shareware and other commercial digital products for PCs and Macs.
In this model, the software engineer uploads their product to the distributor’s site. The distributor controls all sales and promotion of the product for a commission on each sale made. Developers of iPhone applications use this approach to benefit from Apple’s brand and sales channel. Developers of other applications for PCs/Macs may wish to use several sales channels to increase their potential sales and diminish the risk of a distributor failing (going bust or failing to sell enough of their product).
The shopping cart/payment processing of these applications is completely taken care of by the vendor. On the downside, you have little or no control over the marketing of your product on their site (how the product looks/branding/etc.).
When customers purchase the product, the download link security is managed by the distributor. This entails controlling if the hyper-link has a time limit or if there is a limit on the number of download attempts that can be made.
Given that you have no access to the purchaser’s details; you cannot build up a membership listing of purchasers. As a result, you miss out on potential loyalty purchases. This could affect you if you intend publishing several products and therefore benefit from a listing of loyal customers.
In Summary
If you are creating products that could benefit from the network effects of a large company (e.g. developing iPhone Apps) then you should go with the third party vendor/distributor business model. Your commission will be lower but the sales volumes will be higher. As the saying goes, it is better to have a smaller piece of a bigger pie.
If you wish to sell software online and retain control over marketing and customer data then installing your own sales management and distribution solution will provide the benefits and control you seek.
If you only have one product to sell, don’t wish to capture purchasers in a mailing list and want zero involvement in the set-up, marketing and sales then using one of the many online vendors would be the option for you.
Writing ebooks or software and want to sell them online? Read our DLGuard review and get your software or ebook business online today.
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