Most small software vendors don’t want all the hassle of taking payments direct from customers, so they use a third party registration service. Registration services provide payment processing plus additional services, including handling of:
licence key emails
coupon codes
affiliate payments
taxes
invoice sales
But these services don’t come cheap. According to this calculator some registration services charge as much as 15% commission on every £20/$40 sale. 15%! I find that quite staggering. 10% is more typical, but personally I don’t intend to give 10+% of my hard earned income to anyone, except my wife and the government. To add insult to injury some of these services also try to upsell questionable ‘offers’ to your customers. For example KAGI upsell a licence look-up service for which the software vendor gets a, frankly insulting, $1. I understand from reading the macsb forum that the upsell will be added automatically to the shopping carts of all software vendors selling downloads and will be checked by default. You then have to opt out if you don’t want it. Personally I think every software vendor should offer licence retrieval for free. And don’t even get me started on Digital River/SWREG and their Reservation Rewards ‘offer’.
PayPal and GoogleCheckout are much cheaper, with rates of approximately 3.4%[1] and 2.25%[2] respectively on a £20/$40 sale. But PayPal and GoogleCheckout are just payment processors and don’t provide all the additional services most software vendors need. They provide extensive APIs so you can ‘roll your own’ service, but this sounds like a lot of work reinventing the same old wheels.
Alternatively you can use a third party to provide additional services on top of PayPal and/or GoogleCheckout. I use ejunkie which provides most of the services you would expect from a fully-fledged registration service from just $5 per month[3]. The savings can be considerable, for example (all figures approximate):
If you can offset your GoogleCheckout processing fees against your Google adwords spend your monthly costs could be as little as just the $5 ejunkie fee.
On the whole I have been very happy with the service I have received from e-junkie, once I got it all working. It has been very reliable and the support has been very responsive. ejunkie does seem to be more geared to selling downloads (e.g. e-books and MP3s) than licence keys and the documentation is thin in places. Consequently I had a few issues trying to bend it to my particular requirements. I will try to find time to cover these issues in another article.
You can find out more about ejunkie and try their 1 week free trial here.
Other possible third party integration solutions are PayLoadz and Linklok. For those of you who prefer a more traditional registration services, I have heard some good reports about Plimus and Avangate on various forums. Neither of these companies has been bought out by SWREG owner Digital River (yet). I haven’t used any of these services myself.
It remains to be seen whether pressure from PayPal and Google forces registration companies to reduce their fees, add more services or just puts them out of business.
Thanks to Patrick for first alerting me to ejunkie.
Full disclosure: The above ejunkie links are affiliates links. If you follow these links and sign up with ejunkie I will get a commission. It is not a lot, but I won’t need many people to sign up to cover my ejunkie fees completely.
[1] PayPal rates vary according to volume. Currency conversions cost an extra 2.5%.
[2] Google have sweetened the deal by offsetting processing fees against adwords fees until the end of 2007. This means the rate is effectively 0% if you have a moderate spend on Google adwords each month.
[3] The monthly fee depends on number of products. $5 per month covers 10 products and 50MB of storage.
[4] Based on 3.4% PayPal fee + $5 per month ejunkie fee.
[5] Based on 2.25% GoogleCheckout fee + $5 per month ejunkie fee.
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