FastSpring is preparing its annual 1% donation of annual profits to the United Nations World Food Programme. This commitment, one made in the initial start-up days of FastSpring back in 2005, is timely now due to the WFP’s role in bringing aid to Haiti after the recent devastating earthquake that has left Port au Prince and the impoverished nation in ruins and in great need of aid, food and support.

This moment gives us a valuable opportunity to reflect on the pervasive need for corporations of all sizes worldwide to practice some form of social responsibility, to preserve the common good and to give back to those in need — both in general and in direct response to crises such as so evident in Haiti currently.

The WFP’s web site, www.wfp.org, has detailed reports on its actions to help in Haiti.

The UN food agency started distributing food within 24 hours of the earthquake striking and plans to reach 2 million with weekly rations as part of its emergency operation over the next month. In the week since the quake, more than 250,000 ready-to-eat food rations have been distributed by WFP and the U.S. military in and around Port-au-Prince. [Source: wfp.org]

These days making a donation to aid in a cause is easier than ever.  Right now, for example, if you text the word HAITI from your mobile phone to the number 90999, $10 will be seamlessly donated to the Red Cross in its efforts to aid the victims of the earthquake.

As the new year unfolds, we at FastSpring hold a place in our hearts for those who remain in need.  Let’s all do our part to work toward an improved world in 2010.

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FastSpring clients can now have their products featured on BoomerApp.com, a new discount software website that offers your products to thousands of potential new customers.  Your products are promoted through a special mail-in rebate offer which gets featured on the BoomerApp site.  Customers pay the retail price up-front, and then print out the special rebate form to claim their discount.  The site’s model is based on the fact that a certain percentage of customers will not redeem their rebate despite that we make it easy to do so and that a certain percentage will accept an alternate offer in lieu of redeeming their rebate.

Take a look at BoomerApp.com and contact them if you’d like to be considered for a promotion (not all products will fit the offer profile, but mention you’re a FastSpring client and they will review your product right away for a potential promotion).

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Instead of your customers having to rely on an email coming into their inbox after they purchase, they’ll be provided with the product info (downloadable file, license code, etc.) instantly after they complete their purchase, right on the post-purchase confirmation page. In this era of spam and email filter problems, you can’t afford to require your customers to rely solely on email-based fulfillment. By providing this instant gratification to your customers, you will increase customer satisfaction while cutting down on support volume.

Customers will no longer need to check their email program; they will remain on your site after purchasing, potentially exploring an additional purchase. Eliminate emails from upset or angry customers who need to start using your product instantly but who can’t afford to wait for a few minutes as they wonder whether they will in fact receive an email. No more customers who complain they never received an email from you for one reason or another and are quite dissatisfied because they haven’t been able to use the product they paid for. You will reap the benefits of the improved level of customer satisfaction. In addition, you can customize the content your customers will see on the order confirmation page in case you want to communicate something specific after they complete their initial purchase.

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Andy Brice, a friend of FastSpring’s and the developer behind the SuccessfulSoftware.net blog, recently compiled data from a group of small software firms to analyze their conversion rates from visit to download, visit to purchase, etc. You can see the results from his survey and see how your site’s conversion rates compare with others by clicking here.

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If it’s indeed the typical software/hardware bundling arrangement, you’ll likely be expected to accept a per unit fee ranging anywhere from $.10-$1.00 per unit bundled, depending on the OEM partner, the anticipated unit volume, etc.

Assuming that’s the range you’re presented with, you’ll want to ask the OEM partner to justify that kind of rate by guaranteeing a minimum volume.  For example, if they are only open to paying $.25 per unit, require that they bundle a minimum of 15K or 25K units in the next 12 months, and explain that otherwise there is no way to justify their extremely low per unit rate relative to what average customers are paying you per unit (for example, your MSRP might be $29.95 per unit).

Setup a sliding scale so that the more units they bundle the lower per unit rate they’ll pay, so the OEM partner is incented to bundle as many units as possible and so they can get the low rate they desire from you, provided they hit certain metrics, but just not for “free”.  Some OEM partners will be able to bundle a few thousand units, while some of the larger ones can do a few hundred thousand or even a few million units, so it can really add up, although they will expect the rate per unit to decrease the more volume they can do, which is fine.  Just make sure if they tell you that they’re expecting to bundle a large volume of units, that you tie them to it in order to get the pricing they desire from you.

There are a few reasons why OEM partners get away with such low rates.  They can often guarantee a substantial minimum number of units (though not always, and sometimes it’s still a deal worth doing).  OEM partners realize that you get free branding when they bundle your products, that you can sometimes collect email addresses from their users, upsell their users, etc., and this value you receive further justifies their low rates.  Also, you, as their partner, can appreciate the economics that lead to the OEM partner only being able to pay a very small % of the purchase price they charge their own customers given all the other expenses they have in each sale of their own product that they’re bundling you with, the other bundling product partners they’re paying along with you when they sell their own product, etc.  If they sell their own product say for $30.00, pay retailers, distributors, etc, buy advertising, have a significant cost of goods on their hardware product (being that it’s a hardware product with hard costs, not a software product), plus pay for 3-4 bundling product partners each being paid along with you, you can see why they can’t afford to pay, for example, $5.00 per unit to each bundling product partner, but are instead dealing in pennies per unit.

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We recently added a section of our website that features client testimonials.  You can see what clients are saying about FastSpring here.

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Personally, I would only go with a .com. If it’s not an option, I’d go with a different domain. With that said, I have had a software firm that only has a .net (we didn’t obtain a .com for Picasa.net until right before we sold Picasa to Google) and it did fine, but a certain % of users will look for you at the .com address and never find you or will find a similar service depending on who owns the .com. It’s hard to know what that % will be for your particular offering. You can bid on Adwords for the domain with .com and try to push those folks to your non-.com page, but buying .com keywords via Adwords doesn’t always work out.

There is a real credibility issue when a business doesn’t hold the .com, and it can make a significant difference in results depending on the type of business. It doesn’t mean you can’t still be successful using a non-.com, but why add more obstacles to success than one already faces if you don’t have to? One site that can help when trying to find a .com that fits with the words you want to incorporate in your domain is NameBoy. It’s not great but it can at least help spark some ideas.

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I’ve been involved with a software product in the past that used online activation.  It had pluses and minuses.

It made it harder for users to do sketchy things in general with the product in terms of usage and purchasing/sharing, and let us track more of what they were actually doing with our software.  When a customer complained about something and requested a refund, we could always tell if the customer had tried activating on countless PCs before contacting us so we had an idea of how honest they might have been being before we responded to their complaint or refund request.  And we were able to have a policy that refunds were an option when no activation occurred but not when the user already activated (other than in special situations where a customer was particularly upset for a legitimate reason) since we had no way to stop them from using the product indefinitely once they activated.

Using online activation more or less eliminated piracy, which was great and we felt like one of only a small number of software firms that didn’t have a crack out there.  However, it led to customers complaining about lack of Internet connection being a problem, so it’s good to have a solution for those without net access such as an offline activation scheme to use in special situations.  It also limited our ability to work with some distribution partners.  We had to let it go to an extent when we entered retail stores since retail store users are less sophisticated than online users and definitely can’t be required to have Internet access.  In retrospect, while that opened us up to a little piracy, it was a good move overall.  Being overprotective has its costs and in our case the distribution opportunities were worth the cost of a small % of users not paying for the product, esp. considering a good % of those type of users wouldn’t pay for our product anyway, given that they’re the type looking to steal it.

Ken’s added thoughts:  If you sell software into schools for example, not only will they often not have net access, but they often need a method to install the software program on many machines in a more or less automated way (silent install).   The registration scheme must be simple and not require unique action on each machine in cases like this.  Also, one thing to consider is that if the registration process is too difficult, it can cost you money.  I’m aware of at least one company I work with who regularly gets chargebacks simply because their customers are all to often unable to navigate all the steps required to complete registration.

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I’m not a big fan of MBAs, though it can be good for people who are not naturally business oriented and have minimal business experience.  For entrepreneurs, I’ve often recommended reading this book:
The Portable MBA in Entrepreneurship

I read this when I started my first company out of college (here’s an old story on it: GrapeApe) and it helped me greatly.  It covers key areas the MBA covers, and it’s from Babson College, home of the original entrepreneurship MBA program.

Between this book and having the experience of starting a business, I felt after my first business that I had better experience earned “in the trenches” than I would have obtained through an academically oriented MBA program.  I have plenty of friends with MBAs and I think they would have been better served investing the money into starting a business and learning on the job.  That approach is not for everyone, but it sure is educational if you can stomach it, and can be quite fun as well (not to mention, no academic homework!).

If you want to read Uncle Saul’s take on getting an MBA, you can view his post here. For those who don’t know Uncle Saul, he’s a fellow blogger and friend to FastSpring whose blog we enjoy.

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Since we’re not a financial blog, I’m not going to go into too much detail on this other than to point out a statement made in the past by legendary long term investor Warren Buffett:

“Be fearful when others are greedy, and greedy when others are fearful.”

He seems to be putting his money where his mouth is, making some recent investments in areas others are particularly fearful of.  I’ve noticed a lot of younger and less experienced investors are cashing out and heading for the hills while older, more experienced long term investors are actually buying, not selling.

Something to think about when you find yourself emotionally reacting to changes in the stock market.

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