The concept of software is nothing new — the term was first introduced in the 1960s to separate the software’s function from computer hardware.
Software has grown a lot since the early days of large data storage compartments and floppy discs. Today, many brands create their own software and sell it for personal and business use.
Did you create the latest ground-breaking software? If so, you should consider selling it. You put your blood, sweat, and tears into your software and you deserve the rewards.
But creating a software monetization strategy is easier said than done. Here’s how to monetize your software so you can profit from your genius creation.
Starting Points of Any Software Monetization Strategy
Not sure how to start monetizing your software? Try asking yourself these three questions.
What Is Your Software?
This question sounds self-explanatory, but you need to accurately define your product and explain why it’s useful for customers. Before monetizing your software, describe its functions and benefits in detail. This will better sell your software.
There’s another reason why you should define your software. Certain software types work better with specific monetization models. You’ll open up your monetization opportunities and find the best strategy for your customers.
What Are Your Competitors Doing?
Next, you’ll want to identify the competition. While you created a genius software, someone else likely had the same or similar idea. But take this as an advantage. Learn what your competitors are doing and how you can improve your strategy.
There are many ways you can track your competitors. Use tools that can crawl your competitor’s website and social media pages, so you can gain insight into their marketing strategy. You may also be able to identify their sales metrics for a specific year or quarter.
How Do Your Customers Purchase Products?
There are more buying opportunities today than ever before, as you’ll learn in the next section. Before choosing a monetization option, understand how your customers will buy your products — or even if they will buy your products.
You’ll want to know essential software monetization tips. For example, some audience members prefer a subscription-based service so they don’t have to manually pay for the software. But other types of audience members may prefer a one-time purchase, especially those who are concerned about finances or don’t plan on using your software regularly.
Some audience members don’t want to pay for certain types of software. If this is the case, you can monetize your products by offering more paid features or optimizing your software for ads.
No matter what type of monetization you decide, make the process as easy as possible. If your sign-up or checkout process is complex and not user-friendly, you risk losing sales.
Ways to Monetize Your Software
When monetizing your software, you’ll want to think of more than just generating revenue. You’ll want to remain competitive and be able to work with customer needs. Keep this in mind when reading these monetization strategies.
Selling a License
The most traditional way to profit off of your software is by selling the license. When selling the license, you’re essentially telling customers they can use the software with a single purchase. The user must pay this price before using the software.
There are pros and cons to this strategy. The disadvantages are the lost revenue opportunities. The user is only making a one-time payment, rather than regular monthly payments.
There are also downsides for the user. Oftentimes, if there are updates or maintenance required, the user will have to pay extra for them.
Many downsides of the traditional selling strategy were solved with the subscription-based model. In the software world, this is called SaaS (software-as-a-service).
This service requires customers to sign up for a subscription where they pay an ongoing fee. This fee could be monthly, quarterly, yearly, or more. The customer will pay this fee until they cancel the service.
One of the issues that SaaS subscriptions solve is the inclusion of maintenance and updates.
SaaS companies often update and maintain their software at no extra charge to the customer. This is because customers aren’t paying for the license; rather, they’re paying to use the service, so the software owner can make any necessary changes and updates.
If you choose this monetization strategy, you’ll need effective SAAS billing software in order to charge reoccurring payments in a secure manner.
Is your software an app or a game? You’ll want to offer some in-app purchases, especially if your software is free. A common example is players buying “coins” or “gems” for their game. They can use these added perks to advance in the game and more.
Crowdfunding is becoming a popular monetization option. Customers aren’t confined to paying a specific price for a price — rather, they pay as little or as much as they want.
Many crowdfunding campaigns also have different price levels. For example, if customers pay $50 then they can access the software. But if they pay over $100, they can access the software and also receive extra features, merchandise, and more.
Voluntary contribution and crowdfunding are often used by software in the entertainment and media spheres. This method still generates revenue while still enticing their audience.
As well as offering a voluntary contribution, you can optimize your software for ads to generate more revenue. This is common for gaming and entertainment software. With this method, users can either opt to use the software free with ads or pay for ad-free.
Profit From Your Software
If you created amazing software, you’ll want to reward yourself for your hard work. This is why you should monetize your software. Creating a software monetization strategy isn’t easy at first. Just follow this advice and choose the best strategy for your software.
There may come a point where you’ll need an IT team to ensure your software experiences no downtime. Click here to know how to choose the best IT firm.