The road from my first sale to $1.000 and how to get to the next $1.000
02 July 2020
Last year, when I was working on The Maker Report and completed the survey myself, I summarized my year with a relatively short sentence: This is hard! And I really meant it. Taking the first step is easy, it’s a different story to keep walking.
By the time I’m writing this post I’ve made $1.365 through the products I built in the past 18 months. Based on my yearly review that means that the income from my products almost tripled in the first half of 2020. Now, my goal is to keep this pace or make it even better. But I have mixed feelings.
I made my first sale on May 30, 2019, with Story View. The time I reached $1.000 in revenue was about exactly one year later. To be honest, I thought that’s gonna happen much faster but by taking a closer look at what I did to get there, I shouldn’t be surprised.
From the 8 products I launched during the last year, 4 were free and I offered a free version with limited functionality for 2 more. So basically 6 of my 8 products were free.
The motivation behind creating a free version for some of them was that I thought I can reach a broader audience that way and later I can convert those users to premium customers. Well, I was wrong. When I rolled out the free version of Story View no one purchased the pro anymore, everyone went with the free plugin.
After I removed the free option, the sales returned almost immediately. I reached out with a limited time offer to those who used the free version but got zero response and the same amount of sales.
Something similar is happening with Gift Hunt. The free version got almost 300 downloads, next to the 9 sales of the pro option.
And I think the trial period I’m offering for my Shopify App is also too long as some users started to take advantage of it. The 5 day trial is just enough for them to install the app, run a short campaign, export the collected user information, and remove the app before they have to pay for it. This was clearly visible during Easter when my app got a bit more attention:
I’m still not sure if I should care about these users as they probably wouldn’t be great customers eventually.
Long story short, if you want to make money with your products, building free tools and offering free options is not a great way to do it. At least, not at the beginning.
The business model
Only one of my products has a recurring business model. That means that I need new customers to grow the revenue. The reason I choose this option is that the products I built are mainly "desserts", not business-critical tools but small addons that most of the people wouldn’t pay a monthly fee for. At least, this is my assumption.
Still, if I have a product that I'm selling for $25 and I can make 10 sales in a month, that's $250 revenue monthly and $3.000 annually. So with 5 products for the same price and with the same amount of sales, that's $15.000 yearly. That wouldn't make me rich, but that's not my goal anyway.
The problem with this is that if I can't cross-sale my products (so I can't sell more than 1 product to the same customer) that means I need 600 individuals to purchase one of my products. I had 60 customers in the last 14 months. And I know (I hope) this number is going to be higher by the time but sill. 600 is a lot.
With a 10% conversion rate (which is higher than the average) that's 6.000 potential customers. Since the launch (May 2019), the Story View landing page was visited by 4.000 unique users and that's my most successful product at the moment. It's on the first page of Google for some keywords, it was mentioned in a few blog posts and other articles and it was quite popular on Product Hunt. I don't think the same thing will happen with all of my products.
Let's assume that I have a product with a monthly recurring business model and the base package is $10 monthly. With 2 new customers every month (and taking out churn from the math), after a year the product would have 24 customers with a revenue of $1.560. That's just the third of the customers I had in the last 14 months but the revenue is still higher. With one product.
It's pretty clear that if I want to make a living from my products, I have to change my business model.
On paper, this looks easy. My problem is that most of the product ideas I have (I like to get rid of them occasionally) are small tools and I think a recurring business model wouldn't work for them. And this is my biggest struggle at the moment.
I'll spend the upcoming days clearing my thoughts around this because the path I'm following at the moment is just a slow way to burn all my savings and that's definitely not a thing on my bucket list.
And a few key learnings (for myself) in the end:
- working on free products is fun but that won't pay your bills when you are an indie maker
- just because a product made a sale, that doesn't mean it's successful
- almost nothing is going to take off by itself, finding the right channels for distribution takes time and in most cases, it's boring but inevitable
- trying to work on several products at the same time and keeping the quality high will lead to burnout (and the quality will go down)
- if something is not working stop spending time on it