We sell several pieces of software. We have an “It’ll Work” guarantee. In other words, if we can’t get it working for the customer, we’ll refund. We don’t refund in other circumstances – because software is copiable. Sadly, there ARE unscrupulous people who will download software, demand a refund, then use or distribute it (we’ve encountered them, and found them to be some of the nastiest people we have ever met). So in order to get a refund, we have to have tried, and failed, to get it working for the customer.

We don’t give refunds if the client says they tried and won’t let us try. User error is too high. We don’t give refunds if someone says, “I thought it did THIS” when our published documentation clearly states that it does not. And we don’t give refunds for terminal stupidity either. I know, that is harsh. I think I’m in a harsh mood today.

Two weeks ago, a client bought an auto-installer from us. He was hollering to us within minutes that it did not work, and that we did not give him instructions. Now, please note, that the software comes with a QuickStart Guide. 17 pages of instructions on how to set it up and use the software.

To set up the software, you have to do several things:

1. Create a sample install, and bundle the files to load into the installer.

2. Change the filenames in the installer config files, to match the names of your site files. (There are TWO names you have to change in several places, that is all).

3. Name the folder the same name as the Product ID in the shopping cart, and put the config and site files into it.

4. Upload that to a specific spot on the server.

He was crying about not having instructions, so I simplified the instructions in the manual, heavily shortening them for the support ticket response. He then asked me why those instructions were not in the manual (they were, and they were clearer there).

He made it clear that he HAD downloaded the QuickStart Manual, but that to him, it was deficient in some way, while my less helpful support ticket instructions were somehow superior to it (it was clear he simply did not want to read it).

He then said it was still not working. I looked. NOTHING had been done. He had unzipped our software, loaded it to the server, and wondered why nothing was working! He hadn’t set up a THING.

I gave him more instructions. He complained again. But got a little further. Several more complaints later, I finally went in and finished the job, performed a successful install, and sent him the URL for the install. Mind you, all that was wrong in the first place is that he didn’t follow instructions, and never finished the setup.

He replied a few minutes later that he had found the reason why it wasn’t working, and was making changes. He then blitzed my fix, and deleted all traces that a successful install had ever occurred. But I didn’t know this until he began hollering at me again two weeks later, demanding a refund.

The software worked on his system. What didn’t work, was the customer. I’m not sure if he could not read, was too lazy to read, or simply wanted to try to bully someone else into doing the work for him. I don’t think he has enough technical smarts to be successful at what he wants to do, because he doesn’t seem to have a grasp on structures and processes that he needs to have.

Anyway, I explained that it had been working.

He said that since he had not seen it, obviously it had never worked.

I told him I’d set it up again.

He told me he wanted a refund. Refused to even answer about the offer to fix it.

I told him his situation did not warrant a refund, but if he provided the install files for the site he wanted installed, I’d set it up for him again.

He then began threatening, in no less than three emails. He’d report me to the BBB (that’s a joke, so no threat there), he’d tell everybody how horrid I am, unless I gave him a refund or the upgrade to the version that is 3 times the cost of the one he paid for, and the “full manual”.

My response was to ask him why he did not want me to fix it, that I could have it fixed within half an hour.

I also informed him that if he did choose to blacken my name, I’d remove any sensitive info from the support emails, and make those public, so anyone who wondered whether he was telling the truth or not could judge for themselves. (Anyone who saw his frank stupidity would know that we had honored our agreement fully.)

I added that the Technical Manual had NOTHING in it that pertained to the version he had bought, it only had info for the Full version, and that the Full version would do him no good since it worked the same was as the less expensive version, which he had been unable to figure out.  I finished by telling him I refused to be blackmailed by threats into issuing a refund against our policies, or into giving him a free copy of our expensive software.

His next response was by email – apparently in an attempt to avoid saying anything else on the support ticket that I could make public! He demanded that I fix it today or give him a refund. I informed him that he’d have to send me the files (which I’d already told him three times previously). Not sure what his response to that will be.

There are those who say, “just give the refund”. But when someone starts trying to blackmail me, and when they are clearly NOT entitled to a refund according to our terms, I don’t feel it is wise to give in. We created our terms very thoughtfully, and for sound reasons. Those reasons are to protect one of the pillars of our business from theft and fraud, and are as important as avoiding a dissatisfied customer.

I have given free upgrades to dissatisfied customers who were having problems we could not immediately solve when the less expensive version was new and all the bugs had not been worked out. But this time I knew it worked. I knew there was no problem with the software, and this guy was not being honest, or even rational. He gave me every reason to believe that he was in fact, just trying to scam me. So a refund is not an option.

If he does send the files, I will be documenting every step with screenshots, and with witnesses. And he will be informed that if I have to fix it again, I will charge him for it.

I hate dealing with unpleasant customers. But I am WAY beyond the point of feeling like I have to grovel and MAKE them satisfied, because frankly, it is impossible to do that with many people. Instead, we have written good, and very fair policies, and we stick to them. When people get unpleasant and expect to be an exception, we stick to the policies anyway. They have a purpose, and if we let people bully us into making unwarranted exceptions, we aren’t helping them, or ourselves any at all.

UPDATE: Client did not provide the files necessary to set up his installer. So I duplicated one of my own installers for another system (he wanted ZenCart, I used Joomla), put that into his hosting, and the installer again works perfectly. I documented with screenshots, so I can prove that it does indeed work.

We just released VirtueMart Flex Tax, and Authorize.net SIM Flex Payments for VirtueMart. So what is new and special about these add-ons?

VirtueMart Flex Tax started out as a means of calculating Canadian Taxes. There is another option out there for this, but it is clunky, overly complicated, and requires modification of way too many site files (this makes sustainability difficult). The use is also overly complicated and unintuitive. We also had US clients that needed VM to do things that it did not do. VM Flex Tax was designed to elegantly handle a range of tax computation limitations in VirtueMart.

Rather than developing a “Canadian Tax Patch” for VirtueMart, we developed a Flex Tax add-on that addresses all the needs we saw in VM. Instead of saying “We need to handle Canadian Taxes” or “We need a solution for Florida or Chicago Taxes”, we started with functional needs. We identified four needs types:

1. VirtueMart did not allow multiple level taxes. In other words, you could not do a Country Tax, and then separate State Taxes, and then City Taxes to easily and elegantly handle many levels of taxes without having to set up combined taxes for each location (some laws require a breakdown in tax readout on checkout). So we wanted to be able to set a global Country tax, then State or Province taxes which would add to the Country tax, and then a City tax if needed, so we had a flexible three tiered computation.
2. VirtueMart did not allow proper control over how the taxes were charged. It offered “By Vendor” and “By Purchaser”. Problem with that, is some locations require that taxes be charged by the billing address, some by the delivery address, and some by both (Florida and several other states do this). So we expanded those options to cover all the bases.
3. VirtueMart did not handle shipping taxes in any way that was actually useful for most store owners. Most states that charge tax on shipping require that it be computed on the same basis as the product taxes, but VM was simply not capable of being bullied into this basic logic (it only allows you to set a single tax rate for shipping, and won’t charge a different rate by location of the buyer – and it only allows you to charge tax on shipping at all if the tax computation is set to Vendor based taxing!). So we added in the function to choose “Same as Product” for shipping tax computation. Because we did not want to lose any function (in case anyone actually needed the convoluted method that VM currently provided) we also added in an option to preserve the previous function.
4. VirtueMart had a single tax readout on checkout. Many areas require a breakdown of the taxes charged in the readout. Previous coders who provided solutions for this required that you use THEIR VM template to achieve this function. Our coder (brilliant guy, really!) did not use that method, but coded the function into the core files, so it works with any template.

This new add-on provides function for a wide variety of situations, in the simplest possible manner. It was designed to allow you to pick and choose the functions you need, so that you can use them in almost any combination, to meet the needs of  US and Canadian taxes, pretty much no matter where you are.

Our second release is the Authorize.net SIM Flex Payment Module. Authorize.net offers two ways of processing payments. The standard method collects CC data on YOUR site, then transmits it to AN. This provides PCI compliance headaches for small merchants, because the security burden rests squarely on them. The AN SIM method of processing payments transfers the customer to AN before any CC data is entered in, meaning that AN assumes the risk for all PCI compliance (this is the same method used by PayPal standard). This is a huge financial relief for very small merchants.

We discovered while researching options for this kind of module, that many other CC Gateways offer “Authorize.net Emulation Mode”.  This means that we could code a single module, and have it work for more than one gateway. We have simply added new Gateways as our clients have requested. It currently supports:

• Authorize.net
• Eprocessing Network
• Internet Secure (Canadian)

Again, our coder approached it from a very elegant coding stance, and simplified it so that it requires minimal user complexity.

Developer licenses are available for both modules, allowing installs on unlimited sites.

We used to love Ryze, before it fell. Now it is not trafficked enough to be worth spending time there. But it sure did work. We got probably 2/3 of our business from relationships on Ryze. Because they were all business, and predominantly startups and WAHMs. A high concentration of a very effective target market.

FaceBook has been much less successful. It takes more work to get fewer responses. Because it is a mix, it is like shouting to the whole world, instead of being able to talk quietly to people who are interested.

There are those who may disagree with me, but you really can’t just establish a presence on FaceBook and be yourself, and get business from it. You could do that on Ryze.

On FB, you have to plan and work very hard at targeting, and attracting people, and then the majority of them are not interested in business relationships. It is a very scattered approach to promotion, and you can only narrow it so far by using Pages or other features, because FB was not intended as a marketing venue to begin with.

I’m not suggesting that FB is not worth the effort. I think it is. But the return rates for my time are far lower than they were on Ryze. Perhaps 10% or less.

Sadly, Ryze is a dead duck, and there is nothing out there that comes close to replacing it. It worked for a number of reasons, and while many Ning sites have tried to duplicate the function, they have yet to provide anything that is convenient to use and effective. Instead, they require a good deal of inconvenience to use them. One reason Ning groups hang around the fringes of social networking, but rarely become anything more than fringe sites.

The small business, WAHM, Startup, and side business market is not being effectively served online at this point. It is a huge niche, waiting to be plumbed. Ryze had it, then lost it, and most of them are still fumbling around trying to make other systems work, without the ability to use a system tailored to their needs.

So we keep working at FaceBook. And we keep missing the effectiveness of Ryze.

Update, 2013: A few people I knew from Ryze have “gone back”. But they seem to do so out of stubborn nostalgia, rather than any amount of effectiveness. Ryze is still dead, except for a few thriving groups that seem to serve networkers from Asia.

It has been a real struggle to come up with successful software pricing models. We’ve found some patterns and concepts that just conflict in real life, making balancing needs of clients with demands on developers very difficult.

We have a piece of software, which provides advanced automation for webmasters. Now, this software saves a webmaster anywhere from 30 minutes to 4 hours PER use. That is still time they can charge for in many cases, but they don’t have to do the grunt work, the software simply does it. It was never meant for startups – startups really don’t NEED this automation. It is a tight niche software – only works for webmasters who use two specific platforms. So the target market will never be that big.

So, we have two kinds of customers – those who ask us why it is so cheap, and are suspicious because it is, and those who keep asking us why it has to cost so much. It is priced at $395 for the full version, but we usually have discounts on that (big ones). The Light version is $99. Interestingly enough, most complaints AREN’T about the price of the full version. They are about the price of the LIGHT version! We’ve also had prospects email us and ask us whether we would sell them the Full version for less than the price of Lighter. We had to say no, because we simply cannot support it for that.

In many instances, you can increase revenues on software by making up for it in volume. With this one, we can’t do that, for two significant reasons:

• The market isn’t large enough. It is a tight niche market, one that is difficult to reach through marketing, and the customer base will never be that large. So there just aren’t enough prospective customers to get high volume.
• The support is fairly intensive. It ranges from conflicts with server settings, to user typos, to coder typos (hey, they happen), to Failure to Read the Manual. It averages about 1-2 hours per sale. With that kind of support need, we just CAN’T drop the price down and hope to make money by doing so.

So the next suggestion was to drop the price and offer it with NO support, and then charge for support. Hmmm. That’s fine, except you STILL have to support it when it is a typo in the manual or a bug in the code, or a server conflict, because those are things WE are responsible for fixing. But we never know until we get into it which it is (often it is a combination of things, our responsibility and client responsibility). So you can’t just say “no support”, you still have to support it. And since clients can’t draw the line, and we don’t know until we look which type of problem it is, there is no effective way to manage a paid support system and still get paid. Too complicated.

The last one was that we go to a subscription model. Ok, we are going in that direction, but it is, in some ways, counterproductive. In order to implement a subscription model, we need additional programming to track and activate and deactivate the software for paid or overdue accounts. That increases our development and maintenance costs. This means that people are not going to get this for what they want to pay for it – it will still cost them more per month than the cheap ones want to pay.

I don’t feel obligated to please everyone. Basically, I feel that this software is best for established webmasters, NOT for startups. That is who our pricing is for. If they develop it for themselves, they will find they are investing thousands of dollars into coding. We ask them for about a tenth what they’d spend, and they get it now, instead of also having to spend a year developing and testing it.

No one else is offering anything like it, because people who do develop software like it either keep it in house, or they burn out in the development process and do not want to have to support it. Most don’t even finish it if they start coding it, because it is much more difficult than it seems.

It is simple to look at a piece of software from the outside and say, “this should not be so expensive!”. And it is easy to make the developer the bad guy when something doesn’t work as expected for our particular use. But software development is HARD, and supporting it can completely eat up every single penny of profit. So when faced with constant complaints about cost, and a huge drain on resources from support, many companies drop support to nothing, and lower the cost of the software. Their reputation drops too – but people don’t complain quite so loudly because they didn’t lose as much. But that isn’t who we want to be.

I’ve considered just raising the price to $500 and letting it go. Let those who are ready for it pay for it, give them red carpet treatment, and thumb my nose at the rest. But I’m not sure that is the right course either.

Pricing models are often more complex than outsiders assume they are, and the pricing model chosen for a business has to be right for the complexity of factors in that business specific. It isn’t the only factor in success – it is an important one, but to work, has to be combined with other well balanced factors.

We’re continuing to work with the variables to reach that balance.

A friend of ours held a Thanksgiving dinner in town. Hordes of people from nearby towns praised the idea, said how much it was needed, and promised to be there. A handful of people showed up, and none of the people who vowed to be there were part of the group.

Another resident here held a free dinner. Again, people promised to be there, and about 20 actually showed. This from three local towns.

I’m not exactly criticizing those who said they’d be there and weren’t. We had a wedding on the day of the free dinner, and it took precedence. That is just life. So I’m really just trying to make a comment on the law of averages.

Out here in Wyoming, where you count things by the each, such numbers are easy to analyze. When sixty people promise to show, and three show up, you NOTICE. You might not notice it so much in a larger area where you don’t personally contact everybody, and where the absence of a few might not matter so much. I think that the tendency to promise to be there, and then to not show is pretty universal though, and affects a range of aspects of operating a business, especially where actually PAYING for something is concerned.

Three weeks ago we got three calls about our software. All three promised they’d be buying within the next 24 hours. One purchased three days later. One purchased just yesterday. Another has yet to do so. Statistically, this is actually way better than average.

Early on in business, when we are just starting out, we get into conversations with people, and when someone promises to call, we get all excited, figuring we all but have our first customer. Then weeks pass and they never call. We quickly learn that more people SAY they will, than actually do.

The tendency in people is to express interest, even if they are not interested, to avoid hurting feelings. They will also promise to call, then promptly forget, say they’ll be somewhere, then look at their calendar and realize they have a conflict, or just plain not feel like going when it comes down to the date.

It is important that business owners understand that tendency, and not count the interest or bank on sales until they are actually made. It is also important that you adjust what people SAY when you are making projections, or analyzing poll or survey data – another place where people tend to exaggerate interest or commitment.

I don’t think there are any simple rules for doing so either, because it can depend on many factors. But in general, you need to water things down by at least 90%, because we find when we get 10% of the number who claim an interest to actually show up, or 10% of the people who say they will purchase to actually make the purchase, that we are doing fairly well. It can be much lower than that though, with some promotions.

When they say they’ll be there, don’t count on it. Take it with a grain of salt. Believe in people, but understand that what they say, and what they do, won’t always be the same, and it won’t always be because they are unreliable or untrustworthy. It is just how life is.

Many people are always looking for a cheaper deal, or for a “better” person than they just hired. Improvement is a good thing, as is finding good value, but hopping too fast from one service provider to another is counterproductive.

Case Study: A client was offered a 1 year performance guarantee on some services we offered. He bailed at 10 months – during this time, he provided very little in the way of help to allow us to effectively do the job. He then abandoned his site for a year, then decided he wanted it to work for him again. He hired an in-house marketing pro. This person was inexperienced with the site structure, but was learning fast, and also had to learn the business needs and foundations well enough to promote it successfully. One week into the job, the site owner decided he was not seeing results fast enough, and fired the pro. He hired another, who jumped in with enthusiasm. Again, she had to learn how to do many of the tasks, and had to learn his business well enough to promote it well. Two weeks later, he fired her, and hired a third person because he felt the second one was not productive enough.

This business owner is shooting himself in the foot. He is not allowing anyone enough time to learn his business well enough to do the job he wants them to do, and is paying for the same unproductive time, over and over. With this kind of services, there is almost always some unproductive time in the beginning, because you have to lay groundwork. And every time you start over, the new person has to come in and re-lay that groundwork, because they can’t just pick up where the last one left off – they have to orient themselves to the job.

Another client had four websites when we came on the job, all of their previous websites were ineffective because they were never finished. They had us build another, which again, they never did the legwork on to get finished (every client has to cooperate to a certain extent, or a webmaster CANNOT do their job, and this client refused to cooperate with their part of things).  Two years later they hired yet another firm to build yet another site – we suspect this one will never be finished either.

Impatience, lack of understanding, or refusal to provide needed input can stop a business from marketing effectively online. If you spend all of your time starting over, then all of your resources are going into foundations, and you never end up with any kind of results. Results come after you have spend a LOT of time with structure on TOP of the foundation. They don’t come from the time you spend laying that foundation, and the foundation HAS to be laid. Otherwise nothing is ever going to come of it.

If you hire a pro, at least give them a chance to get past that spot, and then provide your part of the job. You won’t see results otherwise, and will waste your resources in endless searches for a quick fix where there is none.

For new business owners, the first experiences with delinquent accounts may be distressing. Especially when it comes time to take action. Our company has instituted a series of policies, mostly implemented due to need, to address the situation. I am not longer as uncomfortable with handling this kind of situation, but I don’t think I’ll ever be completely easy with it.

• It is not rude to create a policy of enforcement for delinquent accounts.
• It is not unreasonable to require payment in advance (with reasonable assurances of performance on your part, such as satisfaction guarantees, refund policies, etc).
• It is not mean to suspend a service when payment is not made.
• It is not unfriendly to attempt to collect on a bounced check or to refuse further transactions from a customer who filed a chargeback on delivered goods.

Many of our company services operate on policies regarding website hosting services. We have policies that are well within the industry norms – in fact, they are fairly lenient compared with many hosting companies. Invoices are sent 15 days prior to the due date, reminders are sent, and if the account is 10 days late, it is suspended. Suspension does not delete the account – nothing is permanently lost. But it does make the site inaccessible by the public. Most companies will terminate (permanently delete) an account that is in excess of 30 days late. We do not. We keep it on the server for 6 months, then back it up and terminate the account.

We do this in an automated system – this actually takes some of the pressure off us. The system just automatically handles many things for us, it is “company policy”, and it just happens automatically, impartially, and completely predictably. We have clients for whom we will grant exceptions. We also have clients that we will not go out of our way for – these are clients who have already abused our good nature, or used up their chances.

It can be difficult at first to enforce policies like that. It can be shattering the first time you have to decide to send a bill to collections. It can be very hard when you have a client whom you like, and they refuse to pay what is owed. We find that if you have set policies, you can tell a client, “I’m sorry, this is our company policy.” If you can automate enforcement, it also makes it easier to cope with it, because that is just how your billing system works. Makes it a little less personal, which is a good thing in this case.

We protect ourselves by billing in advance, so we are rarely stung for large amounts of money. But many industries have a standard of billing after work is completed, and people who work in those industries will have to deal with unpaid bills more often.

Requiring payment is not unkind. It is a necessity of a successful business. There are times when it is appropriate to make an exception – but when you do, it is because you feel the desire to help someone whom you feel needs it due to factors beyond their control. It isn’t a daily thing, and it isn’t something you CAN do on all delinquent accounts. Business requires firmness with many things, because there are people who will abuse your good nature, and take advantage of your kindness. I dislike having to deal with that particular reality – that there are people who expect to go through life not paying their obligations, and expecting to get away with it.

In general, I’d rather err on the side of kindness. But I have clients whom I have turned the automated features in our billing manager BACK on, after having disabled them previously. A client to whom I granted an exception on a few occasions, who simply used up my good will. (After the third excuse, I see a pattern that isn’t going to stop, so I quit being an enabler.) Another client who almost NEVER pays until his sites go down, but who then promptly pays. People whom I generally like in other respects, but who will procrastinate or deliberately ignore their obligations unless I require them to by providing a consequence that they dislike.

It is never a pleasant thing to deal with. But it is a factor that each successful business person must face, and determine a way to state the requirements to the customer, and then follow through when payments for services or goods are not made as agreed.