Upselling for Software Companies
Upselling is a good way to develop and sell more goods when you have a product that already works. For example, if you have a simple version of a product, you could easily develop another one with more features and sell it for a higher price. Thinking in a more general way, you could develop a product that complements the one you currently have and sell both as a package.
This is what big companies do, by the way. For example, Adobe had a big success with Photoshop. When this happened, they started buying and developing other products to complement their flagship product. Nowadays, they have a suite of products for designers that sells for thousands of dollars, instead of the hundreds of dollars they could charge for Photoshop alone.
Microsoft also did this very well with Office. They started with a simple word processor and spreadsheet, then created a complete suite of office applications with complementing functionality. The Office suite is nowadays so popular that it is capable of driving other product lines made for consumers and small businesses.
While this seems to be a game dominated by big companies, upselling can be a great idea for smaller companies too. You just need to be creative and willing to expand the reach of the products you already have.
Complementary Products
As a first step, look at what could possibly complement your product. Develop something to satisfy that need and offer the combined products as a package. This is a way to test and improve the loyalty of your customer base. Loyal customers will be very pleased with the additional functionality you provide, and the fact that they can get more of their needs from a single, trusted source.
This will also benefit new customers and drive more customer acquisition. If you expand your offerings, new customers will have even more reasons to buy one of your main products, since they will collective provide more functionality, even if at a higher price point. Think, for example, of the case of a small company that buys the whole Microsoft Office package just because they need Excel and Access. They might not really care about presentations, but the fact that the additional functionality is there just serve to reinforce the need for the whole package, instead of the single applications.
Another trick software companies use is to offer only the whole package, with high associated price, instead of the separate products. This works well if you have a product that is so dominant that people wouldn’t consider to buy from other suppliers. Customers end up never buying a single copy of Microsoft Word, because they are usually forced to buy the whole Office package instead.
Conclusion
There are many ways to apply the ideas of upselling to software companies. We already see many of these tactics being applied by the big players. Small companies, however, can also benefit by using these methods to improve their profitability and drive the development of new innovative products.
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About the Author
Carlos Oliveira holds a PhD in Systems Engineering and Optimization from University of Florida. He works as a software engineer, with more than 10 years of experience in developing high performance, commercial and scientific applications in C++, Java, and Objective-C. His most Recent Book is Practical C++ Financial Programming.
