More thoughts on micro vs macro donations and the turning point for donationware

[mouser]

I had a bit of an epiphany the other day about why it's so hard to get people to donate for donationware software in the current environment, and it's related to purchase price vs purchase effort.

My hypothesis is the following:

When a person is considering whether to donate for a piece of software, they look at the AMOUNT THEY ARE PLANNING TO PAY and compare that to the WORK+RISK INVOLVED in paying.

If the amount of work far exceeds the amount they are planning to pay, they will not proceed.

IMPORTANT: Note that this is not a rational decision, as far as i can imagine.  But I hypothesize that it is the case.

If it's true, it just adds weight to the argument i've been making that the donationware community needs a savior, in the form of a kind of Universal App Store payment system, whereby *everyone* is set up to making small donations super-easily and safely with just a click of a button.

But if true, it also suggests something else:

The one way to get people to get over the hump and make the effort to donate, is to stop focusing on small donations -- since the smaller the donation, the more resistant someone will be to go through the effort to donate (under my hypothesis).  It means that a focus should be on providing enough value that the amount they are going to spend gets high enough to be perceived as worth while.

If it's true it means that letting people choose their own price to donate may in fact be counter-productive for most potential donors, because it will lead to a chain of reasoning where they conclude they should avoid the software because its "value" to them (in terms of how much they were going to donate) does not justify the work involved.


Now here is where things get interesting.. You might be able to solve this problem if you frame the "purchase" differently.  For example you might be able to say:
"Here is a piece of software.  The cost for it is $100.  BUT if you are willing to go through the trouble of paying via paypal and using a license key, you can have it for $5."

It's possible this would help to avoid the problem where the person first concludes that the "value" of the software is $5.. and therefore not worth the effort to pay for it.  If they view it as a $100 product which they are able to get so much cheaper with a little effort, that might solve the problem.


A more specific implementation of this would look like this:  On the program page is a super quick "Buy Now: $100".  And a link saying "Tell me how i can pay less (or nothing) for this product.."  and the link would take them to a page that let's them pay anything they want including nothing, as long as they are willing to read the instructions on how to proceed.


Thoughts?

[JavaJones]

Wow, some very interesting ideas here. I was right with you all the way up to the "Software costs $100 but you can buy it for $5 through Paypal" thing. Wouldn't they have to use a "license key" for the $100 version? And is Paypal really that much harder than using e.g. Worldpay or some other credit card processor that you'd use for a buy system anyway? Paypal even takes credit cards. So I don't really see how you'd differentiate that.

That being said, maybe if it was more like "If you would like to buy the stand-alone software you can do so for $100. Alternatively you can get a license for all DonationCoder software for a donation of $25 or more to the site.", something like that. I know you prefer donations to individual authors, but you could probably work out a way to distribute it equitably. And there are other ways to structure it too. I just don't get your version really, it doesn't make sense to me as a consumer.

But I think the revelation that the value vs. hassle of the software product and donation requirement for accessing it is more or less spot on. Cost is often less an issue for people than effort and perceived value. And perceived value is a *really* interesting one because it often has little or nothing to do with the actual functionality, capability, or even aesthetic qualities of a product. Value can be completely "manufactured" conceptually, for example. If you can make someone believe what you are selling is worth a lot, they will want to buy it, even (or perhaps even more so) at a high price, regardless of whether the sum total of its working parts costs you $1, or whether its functionality can be duplicated by a free or cheap doodad.

- Oshyan

[Deozaan]

Two points:

1. I consider PayPal to be easier than not-PayPal. Since PayPal already has all the necessary information necessary to make a payment, all I need to do is login, type in an amount, and hit the pay button. Without PayPal, I need to type in my contact information, billing information, credit card information, etc., and hope you take my credit card/debit card. But I do understand that PayPal isn't available all over the world and certain people/places have problems with them.

2. The Humble Indie Bundle is a case of pay what you want (minimum of $0.01) being very successful. But that may also be because the games in the bundle are "normally" about $20 each. So it's a sale mentality, which you brought up with your "$100 software for [whatever amount]" example.

[mouser]

I was right with you all the way up to the

I didn't explain that part well..  Let me try to re-explain.

The main point I was trying to make is,

Offer a super quick straight-through pass to purchase at high price.  That will be the fastest and least-mental-effort path, no more choices to make and the value is set at $100.

And a link to "Learn more about how to get the software at a cheaper price or for free.."

That second page will require them to do some reading and thinking, to figure out if this approach is for them.. they will have to read how to divide up their donation, and how the site works, etc.

The goal is to do two things:
One is to tell them how much WE think the software is REALLY worth, so that they don't think of it as worth the lowest amount they can imagine.
The other is to make it easier to purchase at the full price than to do extra work to get it at a savings.

What it tries to avoid is the situation where:

• Person reads that the software is donationware, concludes they are willing to pay $5 and thus that the VALUE is $5, and then decides it's not worth the effort to go through these steps to get a $5 piece of software.
• Instead we want them to start off saying: This is a $100 value.. now how much mental effort am i willing to trade off to reduce the cost to almost zero.

[worstje]

The price for software will always be compared to the most commonly paid price amongst peers. I can call something a $100 tool all I want, but if I give away tons of licenses on GAOTD, sell it for $30 on BDJ on a semi-monthly basis, have a referral program giving similar discounts... well, people won't think of it as a $100 tool at all.

Why? Reviews and other publicity will all be about those early adopter people who got a then seemingly good prize. Then you check and the prize has tripled. So your user ends up having to wait to get the perceived value, because people do not like to pay more than others for the same product. Just think of all those gamers who whine like no tomorrow if a month after they buy a game the same game can be bought for $10 less.

Also it pays to remember that the internet is a very grown up place now. Search engines make finding reviews easy peasy. There are tons of software directory sites too, and I pretty much expect them to have graphs with the cost over a time period as well. Any price-fu you figure out will bite you in the arse at some point, I reckon.

[mouser]

Deo,

Yes you are getting at my point -- changing the perspective of user so that they start off seeing it as a SALE that they are getting a good bargain on -- rather than having them start out saying this is worth $1 to me and so im not going to be willing to exert any effort to pay for it.

The starting point has to be some communication of the value and bargain they are getting.. And plain donationware may communicate the opposite -- it may bias users to think this is something of no value.

That's why i guess im suggesting changing to perhaps a model which looks more like a traditional software purchase, but with an alternate route that lets people get the software for free or for whatever they want to pay.


Here's a more concrete and maybe clarifying example.

Software costs $100.
OR you can fill out this quick survey and then pay what you want (including nothing), and tell us why you chose the amount to pay that you did.

Now we can see how the user will see that the value of the software is $X, but choose to expend a little more mental effort to pay what they want.

The end result is the same -- people choose how much to pay -- the difference is how they view the "work" they have to put in for that amount, and in escaping the catastrophic scenario where they decide that by definition being able to pay what they want means its not worth the effort.

[mouser]

worstje,

I think that it's been shown very conclusively, over and over, in every domain, that the price labels put on products have *dramatic* effects on the perceived values of products.

People do *not* make rationale decisions about how much to pay for something based on it's innate qualities.

The very unintuitive reality is that there are many cases where people are more likely to buy the same item if it costs more.  And where people will choose an "objectively" worse product if it has a higher price.

These are the strange realities of human psychology..

[JavaJones]

Yeah, I think I get all that, where you lose me is what is harder about the cheaper/donation path? What's hard in the current system is *not* donating, because then you deal with temporary keys, or limited functionality, or "nags", or whatever. Those who donate have it comparatively easy and I agree that Paypal is in general actually easier than other normal purchase options (e.g. credit card). Anyway back to your scenario: what are the differences in process that help someone understand why there are two paths? It still seems confusing to me, and confusion is not good for decision making (and hence donating/purchasing).

worstje makes some interesting points too, although despite persistent whining from gamers about price reductions over time, many still buy games new, and the market is still kicking. It does bring up the idea of "delayed gratification" again though: giving those who pay access to newer versions. Of course the fly in that ointment is critical bug fixes, and then you either have to have insecure/broken versions out there, or maintain 2 different code paths and update bug fixes in "latest" (purchasers/donors) and "delayed" (non-donors). Then you get around to the idea of feature limitations, which is what my company does, and it's actually very successful, generally speaking. But I guess maybe it's not in the spirit of how DC wants to do things?

Edit: your survey example starts to bring some clarity mouser. Is that really what you had in mind though? Other examples? What's interesting about this new approach is it sounds like you'd actually be potentially *increasing* the amount of work people have to do to "donate", potentially artificially so. But this could make sense if you assume that people need that to make them feel like the $100 price is actually legitimate; people are very wary of getting "something for nothing" often times, especially those not familiar with "freebie of the day" type sites.

- Oshyan

[bob99]

Not sure if this would enter into the picture or not. Collection of sales tax on purchases versus accepting donations.  In the event someone didn't read further and just clicked buy now.  I've read recently there are US states trying to collect sales tax on online purchases.

[mouser]

Perhaps I am conflating a couple of different goals.

Put in this new language, the current system attempts the following:

• Attempts to make the easiest path the path of donating; but user must still go through substantial mental effort to determine the amount they should donate, and the value of the product.
• Attempts to make the harder path not donating; though it is still easier to just download the software and use it until it asks you for a license key, etc.
• I think it has some success.  And people who cannot afford to pay do not have to pay, and others can choose how much to pay.

The new idea attempts:

• Make the easiest path actually PAYING some fixed suggested amount, and making this almost 0 mental effort; nothing to figure out, just click BUY.  The BUY path would also be the solution to commercial purchases.
• Conveying a value of the product to all users to avoid them wrongly assigning a low value to it.
• Making the harder path the one where they choose how much to donate, including zero.
• Modifying this secondary path so that it gives us a chance to explain to them how and why they are getting such a bargain.
• Take this secondary path opportunity to try to convince them to donate SOMETHING.
• It might be that the secondary path would not require free users to do anything more complicated, unlike the current method.

Said more concisely, maybe a way to look at the change idea is that, in both scenarios there is an EASY path and a HARD path.

Currently, the EASY path is donating whatever you want; the HARD path is not donating.

The new idea is to make the EASY path making a purchase at a fixed price; the HARD path is choosing an amount to donate, including nothing. (maybe donating nothing is harder).

Explained in that way, the new approach sounds kind of mean

But on the other hand it is a much more MENTALLY CONSISTENT, COMMUNICATIVE and logical approach -- in that the EASIEST path involves the least mental effort, and explains the value of the software.  And the harder path involves more work but sets up the expectation of savings from doing the work requested.

I'm growing increasingly concerned that a major flaw of the current approach is that it starts people off assigning a very low perceived monetary value to the software, and then quickly confronts them with the need to perform some real mental effort in order to get the software.  Work that looks proportionately less attractive as the cost to them decreases (see my first post).  That was the point of my first post, that we have a catch-22 where the less they plan to spend, the less willing they are to perform the mental work to get it.

So the new approach tries to short circuit that put the user back on a more natural path where they can tradeoff mental effort for savings.

Anyway, just thinking out loud here.  Needs lots more cogitation.

[mouser]

Put much more concisely, the new idea is to frame the "work" involved as: Work performed to save money.

Start off with a high value for our product, and let them bring that down to an amount they are comfortable with (including $0) by asking them to do just a little bit of mental effort.

And "work" may be as simple as making the mental effort to actually understand the system of donating what you want.  Don't underestimate the mental cost of having to read and absorb this information and decide on an amount is.. It's non-trivial to many people unfamiliar with the idea.

[cranioscopical]

mouser

I do understand the points that you make. Unsure how I feel about them.

I do feel that there's quite a strong immediate disconnect between DonationCoder and $100 price.

How does all of this help with those who simply want to hang out rather than grab software?

[JavaJones]

OK I think I'm understanding a bit more where you're coming from but the concept still seems a bit hard to get one's head around. That *may* be partly because I know how it already works though. I do wonder how new users would perceive it.

Most importantly I agree that a fundamental flaw with the current system is the lack of clearly established value. So we should I think be looking at addressing that one way or another, whether it's using the approach you're suggesting here or something else.

On another (hopefully related) note, what are your (and others') thoughts on the support-driven model that many open source projects use? It occurs to me that we already provide a *lot* of support for most DC apps, everything from "how to" to videos to documentation (at least in some cases) to (and this is a rarity) quick turnaround feature requests and bug fixes. Truth be told it's almost like we're already following that model, we're just not clear about it and don't benefit from the higher fixed pricing that usually accompanies it. Something to consider?

- Oshyan

[mouser]

Most importantly I agree that a fundamental flaw with the current system is the lack of clearly established value. So we should I think be looking at addressing that one way or another, whether it's using the approach you're suggesting here or something else.

yes.

what are your (and others') thoughts on the support-driven model that many open source projects use?

i have always had very negative gut-level reaction to this -- only because it seems to me to have the potential to end up where the coders get nothing and the marketing company which knows how to sell support services gets rich.  i know that in practice this doesn't tend to happen.. but it just makes me uneasy.

i think for some projects it may make a lot of sense.. though i'm not sure if it makes sense for desktop applications.  i think it does kind of encourage a phenomena one sees a lot in the open source community which is basically that the source is available but few people can get it to work without a lot of "support".  it's not too paranoid to imagine that making things easy to use is a pretty low priority if the basis for your financial support is people needing help figuring out how to use it.

but the middle ground here may again bring us back to the idea of updates.. and having donors get some benefit in terms of updates, ease of updating, etc.  as we've discussed on other threads.

one really interesting model that some open source companies have been adopting is where the newest version is not open source, but the open source version is always 6 months or 1 version behind, etc.  One could do the same thing with free vs. pay versions, where the previous version is always free, and the latest version is only for supporting members.

[JavaJones]

Coupla things. Responding to your last point, that just goes right back to the idea expressed elsewhere of delaying access to the latest versions for non-donors, which has the problems I mentioned above, mainly the lack of bug fixes in older versions (which in severe cases can be a real issue).

As far as your feelings on the support model, I totally know what you mean, but it seems like all that only applies to other products and/or not already established products and/or open source systems where some other company can take the source and publish their own version of the product and sell support for it. None fo that really applies here, and it occurs to me that maybe we have a chance to do that model "right". In other words to take the stigma of that model and turn it on its head and make it actually work, for devs, for users, and for those providing "support". Essentially it's just a redirection of the payment *conceptually* but not necessarily practically.

It may not work for some philosophically, but essentially I see it this way: you justify providing the product for free/cheap (the alternative to your "just buy it" option above) by making the purchase price be for providing support. This doesn't mean you *don't* provide support for people who don't buy or donate, just that the buyers get "priority" if and when it comes to that. From experience I can say it seldom does, at least for the products I've dealt with. The purchase price though still goes to the author of the software in this concept, at least I think it should, partly because often the software author is the one providing the "support" (along with bug fixes, updates, custom features, etc. which can all be seen as support).

The problem I see immediately with it is the suggestion of payment for support, when support is now free and often provided by people other than the authors or you (mouser). Why are those people not getting paid? Well, again it's a bit of a conceptual zig-zag, but the idea is that the support purchase cost is really just a way to get people to pay a fair value for the software. Just as in your example where the value is somewhat imaginary (they could take the free/donate route). I'll grant though that in this it is perhaps a bit more disingenuous. Still maybe there's a way to get it to work. I don't think there's anything fundamentally wrong with getting people to pay for what they already get for free, that happens all the time and is essentially what this whole conversation is about. People pay for support all the time and don't necessarily get much *more* out of it than they might otherwise, e.g. sometimes the forums/community are the best support anyway.

So... more to think about perhaps.

- Oshyan

[barney]

Marketers have known for centuries what psychologist have only recently discovered  , to wit, all personal disbursement decisions are emotional.  Regardless the amount of intellectual investigation and research, the actual buy moment is an emotional, not rational, decision.

Many folk consider marketing to be somehow demeaning, not realizing that they use it on a daily basis.  (Every time you try to convince someone else of some concept you favour, you are marketing.)  Selling software, however it is done, is an exercise in marketing - and the success or failure is seldom based upon the efficacy of the software so much as the perception of the software.  (If you doubt that, consider how Windows and Office became the defacto standard for businesses and most of us mere plebes.)

The whole donationware concept is a matter of presentation and perception:  if marketed properly, it will succeed; poorly, it will fail.  Many good and thoughtful points have been raised in this thread, but the ultimate decision to part with lucre is an emotional decision on the part of the one who holds it.  As long as you bear that in mind during your presentation, you will succeed.  The only decision that needs making is the how of the presentation  .

[steeladept]

I just like to point out that this is beginning to sound a whole lot like TrialPay in many respects.  Not saying that it is a bad thing that you are trying to do, but "buy it now for $xx.xx or do this and get it free..." sounds awfully familiar. In that light, I think you are very much on to something, but is it really the way you want to go? 

Just provoking some thought here.

[mouser]

just bouncing ideas around at this point.. we don't want to do anything that would tarnish the nature of the site.. just thinking out loud about possibilities.

[Paul Keith]

Sorry if this has already been mentioned:

I recently installed an app (I've forgotten which) that upon installation asks:

How many airline tickets have you bought this month?

Underneath are the options:

2 or more tickets (click here to pay x amount for software)

1 (click here for discounted price...I think - I really forgot the software and am not really sure)

0 (ok, here's the software for free)

It's probably a software recommended here but really I forgot which software this is for some reason.

Another thing about price labels: what I've read always lead to the simple statement that price label influences are always relative. They fail to seal the buyer on their own.

You can have the best coffee shop with the most expensive coffee but you're not going to be Starbucks.

Same thing happens in the web. When Reddit went premium, it didn't work because that's mostly a free crowd.

When Metafilter and Something Awful did it back then, it was considered revolutionary in creating a quality community that brings in similar quality users despite the subject of the community being highly receptive to noise and trolls.

It's not a 1:1 comparison though since this is about selling ware and the example is about community ware but hopefully it leads to more clues. I will say this, I believe more would donate to a pre-skinned pre-configured donationware with no additional features and no nagware than a quality software with a sophisticated macro-donation scheme.

[nudone]

As Barney said, look to what is already done elsewhere with marketing. Perhaps think about how donating can be more fun or more rewarding for the donor. If you made it tiresome for someone to donate, they may decide they've paid enough in time - and so donate zero to balance out their effort. You could also annoy someone who was prepared to donate $200 and make them change their mind and donate nothing. Who knows; what does the history of sales tactics show us? I don't know.

Also, $100 doesn't sound realistic - I can't imagine anyone believing that price when most DC utils are similar to programs in the $20 - $40 range. And I don't think there's anything you can do to make the sale instant, literally, one click and it's paid for and downloaded. Isn't PayPal the quickest and most convenient method; and that requires several clicks.

I get how you need people to stop and pause to reflect on what software is worth - you could do that simply be saying the software is $20 and that's it; pay or go away. But this is Donation Coder so there must be donations involved; it really sounds like donations don't work form what is said above - well, they obviously work during the fundraiser and maybe that's the key.

People donate not because of the value they perceive, they donate because they believe in the cause, they want to see the thermometer rise, they want to see the joy it brings, they want to feel part of the DC community (even if they are just standing at the boundary and throwing money in), maybe they want to appease their guilt. This is the marketing issue. Make donating seem cool or fun - or even a way for a wealthy person to brag to their peers.

Have badges, be proud, stick them on your website or on your car bumper, or on your t-shirt: "I donate to DC", "I support coders", whatever, wherever. Make people feel part of something. We're in the "social networking" age, people want to feel part of something - and demonstrate that they are. Look how Apple does it, people pay over the odds so they can feel part of the Apple Gang - and display the Apple badges in the forms of iPads, etc.

That's my contribution: make it fun, make it something I want to be part of.

[mouser]

The $100 was not meant to be for a DC app --- I was just using a really high number to make a point..

[barney]

Have badges, be proud, stick them on your website or on your car bumper, or on your t-shirt: "I donate to DC", "I support coders", whatever, wherever. Make people feel part of something. We're in the "social networking" age, people want to feel part of something - and demonstrate that they are. Look how Apple does it, people pay over the odds so they can feel part of the Apple Gang - and display the Apple badges in the forms of iPads, etc.

+1

While my personal preference is badgeless, most folk consider some sort of badge a good thing.  It's a visible representation of their contribution(s), a source of pride, something saying, "I did that," w/o having to verbally state it.  When public local radio stations hold their fund drives, many of the compensatory gifts are boldly emblazoned with that station's logo.  It's a silent testament to the fact that they made some donation to that station, but there's no amount specified (other than the minimum donation to get that particular gift  ).

I don't know what the software/forum equivalent might be.  Perhaps the title bar stating, "{appname} created by {author} for {recipient's name}" applied to some of the Coding Snacks, where applicable?  Or a bold headline on the page(s) after login, something to the effect of, "Welcome back {name}, thanks for your donation?"  Maybe.  I just don't know.  But something, something that acknowledges and reconfirms that person's contributory effort.  There's a psychological feel good to that kind of recognition, but it also keeps donating in the forefront of the mind, making further donations that much more likely.

Just something to bear in mind while considering methodologies going forward.

[mahesh2k]

I was checking Hybrid theme's business model and found that people who usually don't want to pay for things are supposed to be charged via support model. In case of open source programs, macro and micro donations don't work because people don't want to pay for software in open source world. Again this is my observation.  I'm following warrior forum where most of the marketers are learning from each other and also post some interesting things. I found one thread six months ago about pricing model- 7$, 17$, 27$, 37$ and 97$. They were talking about price that appeals buyers. In case of 5$, depending on where you live, paypal will charge 66 cents to 1.20$ and this will reduce your donations/earnings. 7$ and onwards price is usually most marketers prefer for their products. The reason they don't prefer 10, 20, 30 and 100 is because people feel uncomfortable for paying for software/products in multiple of 10 dollar bill. That's what my observation is from that thread, i'll see if i can dig that thread later.

[mouser]

Regarding badges and other community recognition stuff.. I don't think anything we are talking about has barely any relevance to the group of people who are actually inclined to actively participate in the site.  The relatively small group of people who participate on the forum, and the somewhat larger group of people who even browse the forum regularly but don't post, is not really the audience i'm talking about here.  The people who know enough about DC to post or read the forums i think tend to donate during fundraisers and already have enough information to make a reasoned decision about donating.

Everything i'm talking about here is about the vast majority of users of DC software who will never even visit the forum, and have no interest in being part of a community.

[JavaJones]

I too thought of the "complete this offer for a free iPad!" type of thing, so that's not a good association. We would just need to carefully avoid that kind of impression.

I do like the idea of finding ways to make donating cooler or more rewarding for those *who don't really participate*. I doubt anyone who is active in the forums here really cares if they get a donor badge, but many others might.

- Oshyan