I don’t really have an outline for this series so I’m really hoping that the “#1″ up there in the topic doesn’t stand by itself for too long. Anyway, like I said earlier when I decided against disclosing revenue figures for now (either because I’m humble or because I’m a chicken, take your pick!), I will instead offer up bits of information that I believe have helped Paint.NET to become strongly profitable.

The first tip is simple, and is a play on statistics that is very easy to understand:

Have a Donate Button.

Studies have confirmed* that a website with a PayPal button on it makes as much or more as the same site that does not have the PayPal button.

But really, think about it. If you don’t have a way for your audience to send you money then they probably won’t send you any. You will make $0. However, if you give them an easy way to send you money then you will make $0 … or you will make more than $0. I know, I know, it’s a silly logic pun from a nerdy Computer Science graduate, but it’s also strongly motivational. Hidden in that little phrase is a corollary: “the worst that could happen is that you make money.”

John Chow made $219 last month just by having a silly link at the end of every blog post that says, “buy me a beer!” If he didn’t have that link there then I promise you he would have $219 less in his pocket right now. It would not be made up for from any of his other income streams.

While I was in college I wrote a little freeware app called ListXP and it had a donate link in it too. I maybe made a grand total of $200 or $300 over the course of 2 years. But guess what? Without that PayPal button I would have made a grand total of zero dollars. Yup, that’s right: $0.

I look at these things from a purely statistical standpoint, which is really how (many?) businesses operate. Just like free-trial-to-paid conversion rates, freeware with a PayPal button can have a quantifiable download-to-donation conversion rate. I will say that the conversion rate for Paint.NET is at least an order of magnitude lower than what Patrick has for his Bingo card software (his is about 2.5%) (Edit 2:11pm PST: Sorry, had the wrong URL for that link!). But guess what? My audience is many, many orders of magnitude larger. I don’t any advertising, and I don’t have to ship CD’s or worry about refunds, so my profit margin is also higher.

Patrick’s software was downloaded about 1,000 times last month, which is pretty phenomenal for niche software. By my best estimates, Paint.NET was downloaded about 400,000 times last month. And every time I push out an update, the user is reminded about their ability to donate: in the installer, for about 30 seconds while it does the little “Optimizing for your system” dance, it shows a little banner that invites them to donate. I get a big spike in donations for the 2 weeks following an update … coincidence? So here’s the second part of my tip:

Remind your audience about donating.

Just don’t be in their face about it or be annoying. Because, well, that’s just annoying. Paint.NET has Donate buttons on the website, in the Help menu, in the installer, and in the Save Configuration dialog down in the bottom left corner. These are the areas that I believe bring the least amount of annoyance balanced by the highest amount of conversion. I’m not sure if I’m right yet though because I have yet to do a thorough analysis and comparison of how many clicks they are all getting (each one goes to a different redirect page, which I can then track with standard web stats).

Anyway, it’s important to remind people about donating to your freeware because donations are something that don’t come immediately, unlike a purchase of shareware. A person probably won’t donate unless they’ve already exercised good value from what you’ve given them (as opposed to buying a candy bar where I pay for something I’m about to get value from). In the case of Paint.NET, the donation reminder during upgrade serves as a good place to politely prod the user towards thinking, “Hmm yes, I have received good value from this free software. I like it. I think I’ll go ahead and donate!”

And back to the statistics angle, with regard to conversion rates. Patrick and I both intuitively know that if our download numbers go up that our conversion rate will stay about the same. This means that all we have to do to earn more money from this is to find ways to ramp up the download count, and our revenue will increase linearly. Patrick has experimented with various advertising and fulfillment channels, and is getting a grasp on what works for his product and audience. For Paint.NET, I need to make sure that I quickly say “yes” whenever someone e-mails me asking permission to include Paint.NET on a magazine CD. I also experiment with the website content to see what brings in the most search engine traffic. Et cetera. Lather, rinse, repeat.

I’ve used this basic strategy in a few other places, and it works great. It’s also fun. One time when I was still in college I was getting coffee and I asked the barista girl if I could have it for free. She said “Sure.” So I saved $4 or something. Yesterday the guy who is 4 ranks above me in management (he’s my manager’s manager’s manager’s manager?) gave me a $4 “coffee-or-snack” cafeteria coupon because I said, “You know what you could do with that? You could give it to me.” I was half joking and mostly just in a good/confident mood, but he shrugged his shoulders and said, “Ok.” And then I thanked him, because that’s what you do when people give you things for free.

You won’t get something for free if you don’t ask for it, and the worst that can happen is that you won’t get it. When you buy a car, make sure that you don’t pay the sticker price without a fight. And when you put up a website, the absolute worst thing you can do is to not monetize it.

* Not really. I just made that up.

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