I recently offered a deal for one of my programs with the “digital groupon” company, AppSumo. With a a few horror stories out there of how businesses have been crippled by groupon deals, I wanted to share my experience with my AppSumo deal.
I was initially skeptical that I would get much business from AppSumo, as my price points are higher than what they normally run. Also, my programs are largely targeted at beginners and AppSumo seems to have a more tech-savvy crowd. Also, I’ve made a choice to very rarely discount prices so that people aren’t constantly just waiting for a sale before they buy.
However, I’d used AppSumo before as a customer and had been happy with my experience. I think their model is really clever, and I was interested in exploring a new channel for exposure.
After speaking with their deal guy, I decided I didn’t have much to lose – I could gain some sales from a new audience plus exposure to AppSumo’s enormous database. We decided to go with about a 60% discount off my program. (if you got in on the AppSumo deal you were very lucky as again I don’t normally discount prices and that kind of discount will likely not be repeated!)
We worked with AppSumo to figure out the logistical details of how the program would be delivered to buyers. If you’re curious, all payment went through AppSumo. So people purchased using our normal system, but we didn’t receive any money until AppSumo sent as payment after the deal was through.
The day my deal went live, I was actually on a flight to Paris so I missed the day-of excitement but I did schedule a few social media updates to let my audience know about the sale. I figured I could pick up a few buyers that had ruled out the program before due to the price point.
Overall the deal was a success, although not an enormous windfall. I’m betting that their deals convert better with a lower price point, and an offer more targeted to the start-up community.
AppSumo takes a 50% cut of revenue, and we ended up selling just under 100 copies of my program. Overall, it was worth my time as a business owner to pursue the deal.
For small businesses, I think AppSumo is more palatable than Groupon. Of course the biggest selling point is that they focus on digital products and services, which generally have a very high profit margin compared to brick-and-mortar businesses.
If you’re looking to do a group deal or coupon for your small business through AppSumo, Groupon, LivingSocial, or any of the others you really just need to crunch the numbers to make a decision. I wouldn’t do it if you can’t at least break even on the initial coupon. Businesses sometimes do these deals at a loss hoping for repeat business, but the reach of these sites is so enormous that 5,000 people might be hitting you with a $5 loss each.