Tuesday, May 03, 2005

Rising ESD margins-why we all pay

Recently, a big ESD(software sale portal) rised its developer commission to 40%. This means that every developer has to pay 40% of what he earns as premium to the salesman.
Most users will not note this, and the developers riot along in their mailing lists and their ESD-Union web site. However, users should also understand the reasons why high ESD margins are bad for the platform-read on for the full scoop!
High margins discourage development
If you can get 60% on platform A and 75% on platform B, what will you choose? the PalmOS and PocketPC markets are equally big by now. So, this will lead to most new programs appearing on the PocketPC side of life. Palm ESD's are cutting themselves in the flesh.
High margins reduce the likelyhood of free upgrades
Well, face it. Most PalmOS apps are one-time purchases. You buy them once and get all the upgrades for free. Of course there are some exceptions, but lets ignore them for now. If the margins rise, developers make less money. In order to get to their cash, they start charging for updates.....
Margins increase software prices
Developers need money to live. If the ESD eats more of his income, he needs to raise the prices. Its really simple...
So, what do you beleive? Should the developers be supported? Or are we all stupid, greedy crooks? You decide-the census is open!

15 Comments:

Blogger Brad Green said...

We certainly are not greedy, but the ESDs are. As you say, it can do nothing but hurt users.

12:41 PM  
Anonymous Anonymous said...

Its really not 40%, its up to 55%. Its 40% on their site, then 50% on affliate sites and then 5% more if your software doesn't have real-time fullfillment (either a dynamic reg code or no reg code) and then their is the cost of the transaction.

That's not including that they have the right to sell it at any lower cost than you want. They can give it away if they want.

Then there is the fact that you are required to list every title you develope and it must be listed within 14 days of your release..

And they don't have to pay you for 6 months (actually its 7 months).

This is a 0% interest load to them so they can buy up all the competition. I really hope that the US Attorney General would look into them as they are hurting the market.

PalmSource and PalmOne should also speak up!!

12:57 PM  
Blogger Dmitry Grinberg said...

This leads to developers not listing software on the ESD sites and preferring different payment methods. For example. On PalmGear (I will use it as an example as it is a major PalmOS ESD) UDMH sells for 10.95 USD and of that I get about 5.50 USD. On my site I sell it for 9.95 USD through PayPal, and of that I get 9.36 USD. Therefore It becomes advantageous to foget PalmGear and just use your own site. As even twice the page-views on PalmGear will not make up for the loss. I strongly encourage all my buyers to use PayPal to pay me as it costs them less and I get more of it. I am currently STRONGLY considering completely withdrawing my software from PalmGear as 50% (all the fees charged for 10.95 USD price add up to about 50% of it) is way too much to pay for some publicity. Advertising on PDA247 (about the same number of page-views per day as PalmGear) comes out cheaper in the end. So as a developer I can tell you that this may not only raise the prices but may also lead to less software on the ESD sites. The other option is to raise the price so that I get 9.36 USD from PalmGear too. This would mean I will need to sell UDMH there for about 19.57 USD. Would anyone buyfor that price there? Hell no! Exactly. So also they are the ultimate losers, along with the end-users who will see less software with lesser quality for higher price and less free upgrades. PalmGear and the other ESDs need to carefully examine thier strategies, fire their accountants, and stop biting the hands feeding them - after all without quality programs on the site, they have nothing.

3:43 PM  
Blogger Tam Hanna said...

Hi Dmitry,
I can only agree. See my post on the developers newslist.
But-be careful. I have a strange feeling that PalmGear reads my blog. Want to have the numbers edited maybe, as PalmGear forbids you(IMHO but !!) to sell stuff cheaper somewhere else.
Best regards
Tam Hanna

3:59 PM  
Anonymous Anonymous said...

FYI, they also are 'forbidding' developers to contact the people who buy their software. So no heads up on updates and good luck to people trying to work out bugs--this ESD had better hire some more customer service reps....

5:15 PM  
Blogger Dmitry Grinberg said...

The thing is - the penalty for breaking their contract is removal of my software from the site. You cannot delete software from your developer catalog once it sold even a single copy but in this way they will delete it for me :-D

11:33 PM  
Blogger Brad Green said...

Of course Dmitry, if you need publicity for a new product, you can get alot of it for cheap. Just send a copy of your new ground breaking program to all the pda news sites, and it is likely they will write an article for you. After you get your publicity from the initial burst, you can then move on to the cheap ads on sites like 1src and PDA247. Good luck with PalmGear.
PS, when do you think you will have that TH fixed version of UDMH?

2:24 AM  
Blogger Dmitry Grinberg said...

TH fix for UDMH? I have free evening tonight, so might do it now

2:27 AM  
Blogger Brad Green said...

I just hope you have enough TH devices to test it on.

2:51 AM  
Blogger Tam Hanna said...

Hi Dmitry,
you have an interesting standpoint about this....
Something else: if PalmGear prohibits me to talk with my customers, thats the end for me. I live off the good customer relations, and if they wanna interfere with my business model-they behave like a bull in a china shop, and so will I behave on their site!
How are the other ESD's?
Best regards
Tam Hanna

10:17 AM  
Anonymous Natalia said...

I completely agree with this post. This is the main reason we started new website - PalmSphere (http://www.palmsphere.com).

We offer commission fee of just 17% plus unique product promotion tools you won't find anywhere else.

Check it out, we growing fast with user and developer traffic going up every day.

If there is anything else you would like to see on this site, let us know and we'll make it even better.

natalia@palmsphere.com

5:47 AM  
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