A question we receive a lot is; How was your experience with AppSumo? Meaning a lot of SaaS companies are interested to find out if AppSumo can help them grow their business. As not everyone knows exactly what a LTD is, let's cover the basics first.
What is AppSumo?
AppSumo is a deal site for Software, where you can give their community Life Time Access for your software against a one-time payment. Often this is referred to as LTD, meaning; LifeTime Deals.
In our deal, we are giving away access to our software and all its features for a one-time payment of $89. Where normally when you buy a subscription including those features it would cost you at least $1.000 per year.
Why would you give away your software for such a low one-time payment? Going this route isn’t really helping you to build a sustainable business model, however, it could kick start it. A lot of the software companies who launch on this do it to get their first users in, get feedback, validate their idea, and make money while doing this.
We considered it an alternative way of getting funding. This way we were able to get money in the bank without giving out shares or doing all the investment pitching, and the best thing; you will get users & feedback at the same time.
AppSumo has a marketplace of SaaS deals that are running on their site, around which they have a big newsletter (200k subscribers), youtube channel (63k followers), and a Facebook page (200k+ followers). With this big social presence, they are able to showcase your software to many (often) business owners.
How does Appsumo Work?
One thing we didn’t know about AppSumo when launching is that there are two different programs on their site. One where you do everything yourself (marketplace listing) and the select program (they do a lot for you).
If you are looking to run a deal on AppSumo, we would definitely recommend getting into the select program from day 1. Meaning, do not apply for your program via the self-service listing if you want the most exposure.
Let me explain the high-level difference between the two programs. As we did not do this ourselves it might have more differences than explained below.
Different AppSumo programs
Self listing marketplace
When you go to their site and start the application via the partner portal it would mean you are going to end up in the self-listing marketplace. As the name already says; you will list your own deal and do everything yourself.
In short; when you are not talking to a person to get your deal set up, you are in the self-service part from AppSumo.
Going this way doesn’t have to be a bad thing, the only big difference is that it will have a lot of limits to the other deals you see on their site. To name a few;
- Not being able to add videos
- Not being as visible as select programs
- Not being able to stack codes
- A smaller page to explain your SaaS
How does this look in practice?
The amount and different types of content are a great way within select to showcase your product more visually. The video created by AppSumo is a big part of that.
Let's assume for now that it has no difference in conversion rates. There is one other big difference when you are listing the product yourself; the visibility you are receiving within the communication. In the self-service listing, you don’t get much by default unless you start hitting a certain # of reviews or $ sold.
Go to their site now and check out the deals, a lot of the prominent ones will have the select badge shown below it.
Some way of getting more visilibity in the self listing program are;
- Hitting 10 reviews = Facebook shout out
- Hitting 20 reviews = Email mention
- Increasing your deal price = Limited offer timer
- Having your deal ending = Countdown timer
Some of the big companies you know today started on AppSumo, to give you an idea, see where some of the logos listed on the site. It is not sure if they actually participated in the select program (if it was even live already back then).
A long story short; with the Select program, AppSumo is going to be determined to make your LTD a success. Going from application to having your deal live can take up to 3 months. In this time they make sure you fit the program, have done the proper work on your side, and will allow them to record videos and create your page.
When they create a video for you, you know it will get exposure. See above their latest video getting 500k+ views within 3 weeks. This is not an LTD deal video, but it shows the potential of their marketing efforts.
You can apply to the AppSumo select program here; https://appsumo.com/select/. Be aware that they do not accept everyone for the program. See below the steps they take within their select program.
How does AppSumo make money?
For both of the programs the revenue model is the same for AppSumo, they will take a commission of your deals being sold. With the select program that % is not always that transparent, for the self-service marketplace it is;
- Current AppSumo users; 30%
- New Appsumo users; 5%
They make a clear difference between you helping them to get new users versus the ones already in their database. Listing on both sides is free, but again, the commission % for the select program might vary from what is being said above (let us know if you know more of this).
How to get the most out of AppSumo?
Are you looking to launch on AppSumo and want to get the most out of it. See here what we would recommend doing.
1. Try to get into the select program.
This is already explained above. The select program will give you a lot more visibility from the start, however, this might not work for everyone as they do not accept everyone.
Going this route will give you lots of visibility and sales, make sure you are ready for that. Automating certain processes is definitely recommended as the process will still always have some manual aspects to it (checkin refunds for example).
2. Get people lined up to buy your deal.
When you already have a list of people willing to buy your deal, you are able to kickstart your deal. These people are always likely to leave you a review, which will give you;
- Social proof
- Higher visibility
This is more important when you are going the self-service way. Getting yourself listed does not mean you will start selling from that point, the real work & hustle starts when you are live. Having people lined up is going to help you to get more exposure quickly.
3. Use Facebook groups
As mentioned above there is a big community with AppSumo channels. Utilizing these will help you to get more visibility, going with the self-service way wouldn’t give you access to this right away.
A great way to interact with your potential buyers from day 1 is the community around LTD, mostly within private Facebook groups. We will show some of the best ones below, first we dive into the specifics of this community.
The community around AppSumo is huge, that is something we learned after launching. There are a lot of Facebook groups around LTD that are started by individuals and can help you to kickstart your deal.
If potential buyers have any concerns about your deal you can address them quickly within these groups, it is a great way to get feedback. Some of the groups you want to check out are;
6.4k Members in his group
2.3k active members following the deals Henry Hoe Yong Zhi posts closely.
they have 5k followers.
4. Limit your deal period
As a SaaS your biggest goal is (hopefully) to grow your Monthly Recurring Revenue (MRR), having a long deal period would not help you to get there. By default the deal period is 120 days on AppSumo, we agreed to cut it short at 90 days. Another month would made it more difficult for us to work on building a sustainable business model.
5. Create a clear deal
When you are making a deal it has to be as clear as possible, if this is not the case you will probably get a lot of complaints and no sales. Damage is easily done and hard to revert when you aren’t clear in your offering. It should also decrease the number of refunds, as people are able to refund their code within 60 days after purchase.
6. Limit the deal but provide a lot of value
The LTD community is as mentioned a high demanding community, giving them a good deal is key to make it a success. However, always think long-term as well to see if you can convert them into normal paying clients at one point. For us it was easy, we wanted to limit the MRR generate with Reditus.
Giving $5k per code would give them a lot of value for $89, as before they are hitting that threshold they probably already generated $20K+ before that. We also offered an option for companies who never wanted to be upgraded, they were able to buy 10 codes.
Is AppSumo worth it?
One question we often received was; Is AppSumo worth it?
It is an easy question but the answer isn’t. When you are looking at AppSumo you might have different goals than us or someone else. Some of the common goals SaaS companies have are;
- Getting first ‘paying’ users
- Receive product feedback
- Receive first reviews
- Generate money
- Test product-market fit
Determine your goal first before getting yourself listed, for us it was about getting the first users in and generating some money. Our goal was to get the marketplace filled up with 20+ SaaS companies and $10k in sales. Both goals were met.
When you search on google you will find a lot more ‘extreme cases’ of how certain SaaS companies were able to generate $510k via AppSumo. Example; How to survive a $510,000 launch on Appsumo.
Their first Sentence already explains how they felt about it: “The story of a startup that made it to the #1 best-selling product in Appsumo history… and regretted that. TL;DR: it was awesome, but we’ll never do it again!”
Expect high demands
Again, the LifeTime Deal community is a great way to test your product-market fit, your product and get reviews. There are some things you have to know before you start interacting with them.
The LTD can be highly demanding on what they would like to get from you. You might think it isn’t always worth the $ they pay, but then reconsider if you really want to run a deal. The saying; if you pay peanuts you will get monkeys would not go up here. With someone buying your deal expect them to;
- Question your set threshold
- Question your features limitation
- Question your roadmap
- Request new features
Again, this doesn’t have to be a bad thing, just be prepared. As any kind of feedback is going to help you define your service going forward.
Don’t want to get yourself listed on AppSumo due to their terms (or anything else), see here some of the alternatives.
Would we recommend it to others?
This is the hardest question to answer, as everyone's business is in a different state, has different goals, and works in a different niche. For us, the biggest factor of doing this was to get in our first ‘paying’ clients to prove our product-market fit and build us some runway.
We learned that AppSumo is more helpful to Software that isn’t as niche as us. So if you are running software that can be bought by any type of company (e.g. chatbot, content writing, etc.) it will be a lot easier to get traction.
We focus on B2B SaaS companies that are looking to set up a partner program. Which isn’t a big group within the community.
To conclude, would we recommend it?
I would say, do it if you are okay with a high demanding buyer group, selling your software for a one-time fee. In order to get first users, product-market fit, and your first money in. I would say yes, be prepared on the length of the deal as you can't really get recurring paying clients in during that time.
Trying to grow your SaaS and want to do it in a long-term way where other people promote you and get you recurring paying clients in? Check out Reditus.