Dotcomology by Stone Evans, Joseph Costa - HTML preview

PLEASE NOTE: This is an HTML preview only and some elements such as links or page numbers may be incorrect.
Download the book in PDF, ePub, Kindle for a complete version.


Producing an information product is easy. If you can read this book, you can write an ebook. There are really no special skills required beyond the ability to write and some basic knowledge about the subject. Producing a software product on the other hand does require some special training. It needs someone who knows how to program, who understands how a computer works, and who knows how to construct software. It’s more complex than putting words on a page. It can also be much more profitable.

With the right software product, the sky’s the limits for profits; Bill Gates proved that; but Bill Gates didn’t become a multi-billionaire by simply being a great programmer — most decent programmers will tell you he’s barely that. In fact, if you’ve been using Windows for a few years, you’ll know exactly what they mean. He became rich by combining some basic programming talent with some outstanding marketing skills. It’s that combination that we’ll focus on in this chapter.

There’s no two ways about it, you’re going to need an idea. You might have one already. Lucky you! But if you don’t, it’s time to whip  out your pen and paper, and start scribbling. There must be some kind of tool that you wished you had on your computer, or a program that you use every day that just drives you crazy. Maybe you wish your Media Player stored favorites better, or there was a graphics program that was as simple to use as Paint but as versatile as Paintshop. Put down your ideas and then check out the competition.

Do a quick search on Google to find out what other products are already on the market that are just like the one you want to create. There’s no point in putting a ton of effort into creating a product that’s already out there. Check them out, figure out what’s wrong with them and aim to create a new version that’s just the way you like it.

(You'll also need to be sure that competition is selling. If they aren’t finding a market, what’s the chance your program will?)

10.1 Building an Outline

Programmers always begin with a written outline. When you come to hire a programmer, the better your outline, the easier the project is going to be and the more successful the final outcome will be.

10.1.1 Feature List

Just as it sounds, the feature list is a list of all the features you want your product to contain. Put as many down as you can think of. You’ll find that the list will come in handy not just to explain to your programmer what you want your program to do, but you’ll also be able to use it when it’s time to put together the marketing material. In effect, you’re writing a list of unique sales points.

You might end up with something like:

  • Capable of handling gifs, jpegs and bitmap images.
  • Easy, one-click picture editing.
  • Simple to use, fast to learn...
  • And so on...

I usually find that this is the most enjoyable part of the whole project. As you come to think of each little feature, you’ll find that you actually get quite excited. The project will begin to form in your mind and each feature should lead naturally onto the next.

10.1.2 User Stories

Here we get into more detail. User stories describe the program from the user’s perspective. For the programmer these are the best way to understand precisely what your program is expected to do. For example, you might have a user story that ran like this:

“User right-clicks on image and receives a menu offering Edit functions. The user can then effect a change to the whole image by clicking on one of the options.”

The user story has to be clear enough to be easily understood by the programmer but detailed enough to provide guidance. You want the programmer to be able to look at it and say, “Hey, that’s cool!”

10.1.3 Data Directory

This is where things get complicated. Most software programs work at some level by storing and retrieving data. If you don’t put the right data in the right place, you’re going to get the wrong results, bugs and delays. Personally, I leave this part to the programmer. If he can’t get it right, what chance do I have?

10.2 Study Competition

The only way you can distinguish your software product from that of your competitor’s is by formulating unique functionality into the software. What is the most pragmatic way of devising a unique offering? The answer to this is plain and simple. Study your competition! This is probably the smartest thing you’ll ever do. Make a list of all your competitors and their offerings.

Look out for news items and case studies on your competitors. These would give you a fair idea of what makes them stand out and what doesn’t. Sometimes it is also possible to study customer reviews of software products offered by your competitors. This sort of information is invaluable. It will help you in offering your customers something your competitors don’t.

Assessing the competition will also help you decide what kind of software product you wish to develop. For instance, sometimes it may not be worth selling a particular kind of product if your competitors are dominant market leaders and cater to a high percentage of the market segment. An example of this would be an accounting system or a word processing application. There are many standard accounting systems easily available in the market. Also, MS Word is dominant in the segment of word processors.

10.3 Determine Pricing

Studying your competition also gives you a fair idea of what the pricing should be for your product. The key is to price your product competitively. You may offer a lower price for your product, or offer it at the same price but have additional promotions or discounts. Apart from this, your break-even cost also plays a major role in pricing. Moreover, the break-even cost may be a good indicator especially if your product is completely new in the market.

The formula for calculating break-even cost is:

Initial Software Cost

+ Upgrade Software Cost + Package Cost

/ Profit per Sale

= Sales Needed to Cover Cost

Initial Software Cost is your investment into the core software. Upgrade Software Cost is your investment into additional features or bugs that need fixed. You might determine that you need to add 3 or 4 major features and fine tune other features based on customer response. Package cost is your investment into packaging your software. This includes hosting costs, marketing material, documentation, website design, etc.

Ideally you should estimate the profit per sale to be enough so as to reach break-even after 50-100 sales. Again, while doing this you need to keep your competitors’ price in mind. If you offer a niche product, customers may be willing to pay more.

There is no simple answer to how much should you charge your customers for your product. A client-based software could be charged at a higher price compared to a web based software. Further, you can also have different versions of the same product. The basic version would have the most common functionality and would be priced the lowest. Premium or advanced versions would have much higher functionality and would be priced higher.

10.4 Choosing a Programmer

No one’s expecting you to sit down and code the software program all by yourself. There are plenty of people who can do a great job in a reasonable amount of time — and sometimes even for free.

Why would a programmer who usually charges about $100 an hour work for you for free? Well, that's where things get interesting...

A great programmer is a genius at coding. He can put together 1 and 1 and make it equal 10 or 11, or whatever two is in binary. That’s his job. But very few programmers could sell you water if you were dying of thirst in the Sahara Desert. They’ll tell you what water’s made of and design a program to count the molecules in the bottle but they’ll have absolutely no idea how to persuade you to buy it.

In effect, you can offer a programmer a joint venture: a collaboration of his programming skills with your marketing ability. Neither of you will make any money with a program idea alone. But together you can make a fortune.

That’s what most corporate programmers dream of. They’re just dying for someone with a great idea to come along and help them with the marketing. It’s a match made in Silicon Valley heaven.

So where can you find these freelance programmers waiting to hit the big time? Again, is a pretty good place to look. Many of the programmers advertising there are professionals who have made their money and are looking for a lower stress level than the 9-to-9 that most computer companies expect their whizzes to work.

Many will expect payment but you should be able to find some looking to code for a 50/50 split of the profits. is even better. This works in pretty much the same way as Elance, except that Scriptlance is targeted precisely at programmers. Again, you just submit a description for your project and wait for programmers to bid on it. As with Elance, your hiring decision will be based on the person’s price and experience.

Now, I’m not claiming that it’s super-easy to find a programmer who will work on the promise of future profits. They are out there, but  you’re not going to bump into them on the street. Most of the programmers on Elance or ScriptLance will expect payment.

But there are plenty of programmers who have been waiting years for the chance to come up with that one idea that will give them a constant income month after month for no extra effort.

Be careful who you choose though. There’s nothing worse than picking up a slacker who isn’t prepared to put in the time needed to make the deal work. Ideally, try to find someone local; the whole process is going to go much smoother if you can create a decent personal relationship.

And most importantly, make sure your programmer is genuinely excited about your idea.

If you’re going into a partnership with someone, they have to believe in the project as much as you do. In some ways, this is an advantage over paying someone to do the job (this and the $5,000 it would cost). When someone is truly captivated by the idea they have the motivation to do it right.

When you find a programmer who sounds interested in working with you, ask the following questions:

  • Have you programmed a product like this before? (There’s a fair amount of specialization within programming; if your  programmer hasn’t worked in this field, he might have no idea what’s needed.)
  • How much experience do you have? (Some newbies will work for free to fill their portfolio; that’s fine for you, but it might take a little longer.)
  • How would you improve the product? (Every product can be improved; be suspicious if the programmer says it’s perfect.)
  • How long will it take? (Take too long and the market could change or dry up.)

10.5 Developing Functionality

It goes without saying, but you want to make sure that there is a level of interest within your target market for the software you plan to develop. Again, studying your competition is essential to ensure that your product is sustainable. After all, you would need to at least provide as much functionality in your product as your competitor.

The best way to assess what kind of specifications and functionality should go into your product is by asking your prospective customers themselves. A good strategy of achieving this is by surveying your existing customers and visitors on your website. You  could have the survey on your website itself or Email all your customers with a list of specifications for your software product. Just ask them what functionality they would prefer at a given price. Don’t name the software at this time. Simply list the features and give a short description of what it will do. That should be more than enough to peak your customers’ interests and generate a response.

10.6 Creating a Work Agreement

Even if you hire a programmer through an established freelance site like Elance or ScriptLance, it’s still a good idea to draw up some kind of legal agreement. The last thing you want to happen is to reveal your idea for the greatest software product since Windows and watch some programmer put it together, cut you off and sell it to the highest bidder.

When you’re entering into a business relationship like this with a total stranger, it is definitely worth paying a lawyer to draw you up a basic contract.

The agreement should contain the following:

A Confidentiality Clause

If your programmer spills the beans, he gets twenty years in a Turkish prison. That would be nice, but non-enforceable. A financial  penalty is enforceable though and par for the course in a work contract.

The information you share stays between you. If the programmer tells someone else and you lose money, you want to be sure you’re going to be compensated.


If this is going to be a cash job, you want every penny put down. You don’t want to release your product, watch it make millions then get hit with a lawsuit from your old buddy claiming 50% in royalties. If you’re paying, the product is yours and so are the profits.

On the other hand, if you’re not paying, the product isn’t yours.

If you’re working on a profit-sharing model, you’ll have to negotiate who gets how much of the profits and for how long. And you must be sure that that’s all put down clearly in the agreement.


Creating a software product can take a fair bit of time — at least several months and much longer for really complex programs. Before you write the contract, ask the programmer to tell you how much he thinks each section is going to take and include those in the  agreement. You could even put in penalties for failing to meet deadlines, just as you would if you hired someone to fix your house.

In my opinion though, it’s better to be flexible about deadlines. All sorts of unseen problems can crop up while you’re putting together a program. Maybe you’ll have some changes; maybe the programmer will have some suggestions and these things might have an effect on the timeline. As long as you seem to be heading towards your target release date, and as long as your programmer isn’t stringing you along, I advise being flexible about the scheduling. It’s better to get a great final product than a quick one.

10.7 Packaging Your Product

You have created a great product and are ready to market it. However, before you start marketing your product you need to package it well. If you sell a product that can be downloaded directly from the Internet you need to also provide proper documentation and licensing information along with the software files. If your product is such that it has to be shipped to the customer, in addition to documentation, licensing information and software files on a CD; you must also package the contents professionally.

Documentation consists of all manuals required for a layman to understand and use the product well. Without detailed documentation, your products value would be “zero”, even if it’s the best product around. Documentation generally consists of three guides: The Set Up or Installation Guide, which explains how to set up the software on the customer’s computer.

The Tutorial, which explains how the software can be used on a day-to-day basis. The Tutorial would also offer guidance and tips on how to perform certain tasks.

The Reference Guide, which is much more detailed and describes each function fully. This manual requires the most time to develop.

To create a box image for your product, it may be best to hire a professional to design and develop the box for you. However, if you are familiar with tools like Photoshop and are creative, you may design the box yourself. This will save you money. However, this should be done only if you are confident of developing an attractive cover.

Finally, you should always include licensing information with your product. The licensing information would lay out all the terms of the agreement between your company and your customer.

10.8 Customer Service and Support

In order to develop a good relationship with your customers, you must provide them with quality customer service. Let them know that,  should they have any questions or problems pertaining to the product, they are free to contact you. Provide them with all of your contact information to make the process simple. Make sure that you have a good customer support group ready to help. Reply to their support requests as quickly as possible and assist them until the problem is resolved.

Customer service is one of the most important factors in achieving customer satisfaction and loyalty. Even if you have a great product, if your customer support isn't good, your sales will suffer. Good customer service is perhaps the most important way to build your credibility with the customer. When you are doing your business online, building trust and credibility is the most important factor. Prompt customer service can make all the difference for your business.

For every unhappy customer, you can expect to lose one hundred new customers. Why? When one customer has a bad experience with your company, you can be certain that they'll tell everyone they know about their bad experience. It will travel through the grapevine and ultimately cost you sales.

Follow up with your customers and ask them how they like your product or if they have any questions. This is a great way to not only provide good customer service, but to also obtain feedback about your  product. By listening to your customers, you will know exactly what they want, what they're having problems with and how you can develop a better product.

By following up with your customers and providing great customer service, you are creating a life-long relationship. Satisfied customers are more apt to purchase your new products in the future. Treat them with the utmost respect and go above and beyond the expected.

  • Your customer support should include:
  • A 24 hour toll free number
  • Email support that is quick and efficient Online chat support

Provide a Detailed Frequently Asked Questions Page

Before someone buys a software product from you they will probably ask a few questions regarding any concerns they have about your product. During the first few weeks of business you will receive a lot of similar questions constantly resurfacing. You would be fairly well advised to put this regularly requested information on your website to reduce your administrative workload. Your potential customers will be happy to find their questions answered immediately; you won’t even need to lift a finger beyond the initial setup.

Have a detailed FAQ page that tries to offer a clear explanation of your policies and rules, how the product works, and how the most common problems that customers will face should be tackled. Such measures will reduce the need for providing costly support time.

With information products and software products, there’s no limit to the amount you can sell. You don’t need massive warehouses to stock your goods, and you don’t have to deal with postage and shipping or anything like that. You just have to set up a website and keep the traffic flowing. It’s a completely automated system that brings me (and hundreds of others like me) money week in, week out.

But it doesn’t happen without effort, especially at the beginning. You have the information and resources at your fingertips right now to create a fortune online. Don’t let it slip through your fingers never to be acted upon. Take an action today that will move you in the direction of your goals. If it all sounds like too much work, sign up for my Plug-In Profit Site service here and I’ll setup a turn-key marketing system that sells info products and software for you automatically.