Is Selling an Appsumo Lifetime Deal Worth It?
Have you ever heard of the virtual event platform called HeySummit?
After it first launched in 2019, it offered a lifetime deal (LTD) through AppSumo. In just two weeks, it raked in a revenue of $140,000. More than that, it resulted in an additional $100,000 in annual recurring revenue (ARR).
For most SaaS startups, launching an LTD is a good option to jumpstart their SaaS business and raise funds to invest for further growth. And one of the most popular platforms for offering these deals is AppSumo.
Today, we are going to talk about AppSumo, its pros and cons, and other factors that can help you decide whether or not it is a profitable venture for your SaaS business.
What Is AppSumo?
First, let’s talk a bit about AppSumo.
AppSumo is a marketplace for digital products like online courses, e-books, Chrome extensions, and SaaS solutions.
For SaaS companies and startups, AppSumo gives you the chance to offer your SaaS solution as a lifetime deal. It enables you to sell your LTD to their 500,000+ existing audience called the Sumo-lings.
What’s more, the AppSumo marketing team will also promote your SaaS solution through videos and social media.
And in return, AppSumo receives a commission for each purchase.
Let me stop here since this is not the focus of this blog post. We’ve already covered that in another article. If you want to know more about this platform in detail, check out our guide on launching your SaaS product on AppSumo.
Now, let’s talk about the real focus of this article: whether or not it is profitable to sell LTDs on AppSumo. To come up with a well-rounded verdict, you first have to weigh its pros and cons.
Pros Of Selling an AppSumo Lifetime Deal
Offering LTDs on AppSumo has the following benefits:
- Instant access to a large audience
- Free marketing
- Honest user reviews
- Can help bootstrap SaaS startups
Let’s talk about them one by one.
Instant Access To A Large Audience
AppSumo in itself is a well-known marketplace for SaaS solutions and various digital products. Most users who are looking for SaaS LTDs go to this platform to find a good deal.
And don’t forget about the Sumo-lings that we mentioned earlier. These are avid users who don’t just go to the platform when they feel like it. They actively follow AppSumo and its product listings through email newsletters, social media, and online SaaS communities.
As of this writing, AppSumo’s email list has more than 730,000 email subscribers.
Moreover, Appsumo also has a wide social media reach. It has over 270,000 followers on Facebook; 129,000 on Twitter; and 37,000 on Instagram. It also has an official Facebook group of more than 16,400 members.
That’s the kind of audience you will have access to.
But that’s not all. AppSumo’s community is so comprehensive that it even has premium membership options called AppSumo Plus and Briefcase membership.
These memberships primarily benefit its users with exclusive discounts and software suggestions. If you offer a good enough SaaS solution, you might just end up being on those recommendations.
As AppSumo is a marketplace for SaaS products, this means that they know how to market your lifetime deal and get the best promotion for you.
If you get a deal with AppSumo, you will meet its digital marketing team to come up with a promotional strategy.
AppSumo markets your product through multiple platforms and media, such as the following:
Product listing: Let’s first talk about the most obvious one. AppSumo is a digital marketplace. So evidently, your SaaS product gets featured as a listing.
When AppSumo lists products on its website, it highlights the unique selling proposition (USP) of each product. So make sure to clearly communicate your USP to the dedicated marketing team.
Email marketing: Remember the 730,000+ subscribers? AppSumo sends out email newsletters to its mailing list every now and then. And sometimes, these emails feature the best AppSumo lifetime deals and products.
If your SaaS solution makes it to one of these newsletters, that would be a big boost in exposure and traffic.
Social media: Now, remember the other thousands of followers on various social media platforms? The marketing team can promote your AppSumo deal on their social media pages.
AppSumo usually posts about digital products and website features. It also shares exclusive deals and product recommendations. Again, those kinds of posts are where your product could shine.
Video: This isn’t really a marketing channel. But it is a powerful and engaging marketing tool.
AppSumo has its own YouTube channel where it regularly posts featured products. If you successfully start a deal with them, they can make a video that features your product.
AppSumo’s marketers will post it on their YouTube channel and in your product’s listing. They might even include a link to this video in their email newsletters.
Honest User Reviews
Being a marketplace for digital products, AppSumo also gives its users the chance to leave reviews for each product. Deviating from the usual star-based rating, The platform’s rating system is based on tacos.
These reviews and tacos can benefit you by serving as social proof.
Imagine a potential customer who still has doubts about your product. Hearing about others who have greatly benefited from your SaaS solution may just be the nudge they need before buying.
That’s why you need to make sure that you build a high-quality product that users will talk about. After all, if you want positive reviews for your SaaS product, you would want them to be honest. Or else, you would be getting more refund requests than you expect.
Don’t worry about nuisance and baseless reviews either. Remember that you have Sumo-lings here. These are SaaS users who know what they are talking about.
Sure, you might still find a few AppSumo user reviews that just don’t make sense. But most of the reviews you’re going to get will be substantial and helpful.
Since we’re talking about honest and detailed reviews, that means they won’t always be favorable. Because no SaaS product is ever perfect, that’s just how it is.
There will always be room for improvement and someone who will call you out for it.
That doesn’t mean you can’t do anything about it either. You may have no control over what your users say, but you can still do something about your response.
Even if you get some nasty comments every now and then, answering politely goes a long way in building your brand. Being hostile or defensive with your response can send the wrong message. It may make potential customers think that you’re not willing to listen. And customers tend to avoid being in business with people like that.
But responding calmly and proactively will help you convey to your customers that you care about their opinion. You can also take this chance to ask for more details so that you can solve the problem together.
In fact, that’s one of the benefits of receiving honest reviews. Even the negative ones give you a chance to discover areas where you can improve your product.
And you know what they say: knowing is half the battle.
Still, it’s not enough to just know what to improve or promise to improve it. You have to actually improve it.
That’s how you build trust and long-term relationships with your customers. Listen to what they have to say and act on it.
It Can Help Bootstrap SaaS Startups
Bootstrapping refers to the act of growing a business only with its earned profits and without outside investment.
This is in contrast to venture capitalist (VC) funding where you seek out investors to fund your growth in exchange for shares in your company.
In the world of SaaS, bootstrapping is usually the hard way in growing a business.
The SaaS market is getting more and more competitive. If you’re a SaaS startup, you need to grow fast. Or else, you won’t catch up with your competitors. You’ll get left behind. That’s why a lot of startups seek access to VC funding. With enough money, they can build marketing and sales powerhouses. These would help them grow their brand awareness, become viral, and skyrocket their sales.
Bootstrapping usually doesn’t have that luxury. After all, you just rely on the revenue that you actually make from selling your SaaS product. The revenue is just going to be smaller amounts per month or per year.
Unless you’re selling an LTD.
Since LTDs offer lifetime access, they are generally priced higher than subscription-based prices. After all, HeySummit did make 140 grand on its first two weeks.
But for that to work, you need a lot of early adopters to buy your LTD. And for you to reach that many people, you need a marketing team. And to have a decent marketing team, you need money.
And if you’re a SaaS startup building from the ground up, that can be a major hurdle without investors.
So does that mean you can’t promote your LTDs without venture funding?
Well… not necessarily.
Remember that, with AppSumo, you can get an instant audience and free marketing. You’re all set to bootstrap your SaaS startup.
Cons Of Selling an AppSumo Lifetime Deal
Now let’s talk about the not-so-good details about offering your SaaS product as an AppSumo deal.
- LTDs lack recurring revenue
- High commission rate
- Strict product evaluation process
- Pricing may not reflect your product’s real value
Let’s talk about them one by one.
LTDs Lack Recurring Revenue
Okay, this con isn’t just exclusive to AppSumo LTDs, but for all LTDs.
The design for SaaS products is to have subscription-based payments instead of one-time. This means that your customers will pay you for as long as they use your product. It could be an annual or monthly subscription, depending on the plan.
You also have recurring expenses for maintaining each of your existing users. You provide continuous customer support, server allocation, and other overhead costs for each user.
If your pricing model is purely one-time payments across the board, it may not be sustainable in the long term.
That’s why LTDs are merely a means to an end. If you are a SaaS startup, having your product listed on AppSumo can jumpstart your brand awareness and drive significant initial revenue.
Then you can use that income to fund your growth and secure subscription-based customers and start gaining recurring revenue.
High Commission Rate
When using any third party to promote or sell your product, the commission is a huge consideration. And if you’re going to enjoy all the pros we talked about earlier, you need to be aware of the cost.
It’s a 70/30 split.
And no, you don’t get the 70.
Yes, that means only 30% of each AppSumo purchase for your lifetime deal will go to you. That seems a pretty low cut.
But to balance this out, a lot of SaaS companies think it’s worth it. Otherwise, they wouldn’t offer LTDs on AppSumo.
After all, HeySummit did manage to make 140 grand despite these rates.
And take note that this is a commission. With all the marketing campaigns, the audience, and all the pros we’ve talked about, you don’t have to pay any upfront costs.
You pay only when you get paid.
Strict Product Evaluation Process
One very important thing you need to know is that it can be hard to actually get your SaaS product listed on AppSumo. It’s not like you can just send them your deal offering and expect it to be there in a few hours.
No, AppSumo is not looking for any old SaaS product. Your product has to meet certain standards in order for the platform’s team to consider it as an option.
The AppSumo team will carefully evaluate your product before anything else. They’ll look at the value of the product, whether their customers would be willing to pay for it, and a lot more factors.
The reason for this strictness is to build and maintain trust with their audience.
Imagine if you are a Sumo-ling. You buy an LTD for one of the new SaaS products on AppSumo. But then a few months later, the developer of that SaaS solution goes bankrupt. And your newly purchased software just became useless.
How would you feel? Cheated? Deceived? Like you’ve wasted time and money?
AppSumo doesn’t want to risk any of their customers feeling this way. That’s why they have to be strict when it comes to the products they promote.
This strictness is what makes AppSumo a credible and valuable platform for buying and selling digital products.
But what if you don’t make the cut? What if you don’t pass AppSumo’s evaluation? Does that mean all hope is lost for you to list your products on AppSumo?
Fortunately, the answer is no.
If your product doesn’t make the cut, you can still access the AppSumo Marketplace.
Just a heads up, though. If you do list your product on AppSumo Marketplace, you will have to do your own promotions and marketing campaigns.
But don’t worry too much. AppSumo still provides templates for some materials that you would need.
Pricing May Not Reflect Your Product’s Real Value
When it comes to SaaS pricing models and strategies, the best method would be value-based pricing.
You don’t want to set a price so high that it won’t attract users and early adopters. But you also don’t want it so low that it would cripple your business. You want the sweet spot.
That’s what value-based pricing is. You can sell your product at a price point that matches its value. And your customers would still be willing to pay for it.
But sometimes, promoting your product can mean giving out massive discounts. Especially with AppSumo campaigns, the limited deals can be really inclined to favor the buyers.
And that pricing may not necessarily reflect the real value of your SaaS solution.
Sure, if AppSumo sells your product at a significant discount, you will definitely get inbound traffic and sales. And the platform can drive in a large number of sales through their existing Sumo-lings.
But if you do it too often, the low price point may convey that that small amount is just what your product is worth.
For example, you have a SaaS product worth a starting price of $20 per month. You manage to get it listed on AppSumo and the LTD costs a one-time payment of $99.
Imagine on the first run, it attracts a significant number of buyers. They see it as a great deal. So they buy it and you get a substantial revenue.
But then, after a few months, you decide to launch a limited-time LTD campaign on AppSumo again. And you offer your product at the same price point.
It still may attract some users, but not as much as the first run.
But you decide to launch it again after a few more months.
But this time, your SaaS tool has already built a reputation of being “the 99-dollar product.”
That’s not what you want your potential buyers to think.
If you want your SaaS solution to be viewed as a premium solution in the future, you can’t afford to have it undervalued by potential customers.
So if you’re going to give massive discounts on your LTDs, don’t do it too often. Remember that recurring revenue is still the goal. Relaunch an LTD and discount campaign only if there is a high demand for it.
If you are going to relaunch, use a scarcity marketing tactic. Limit the number of purchases or the duration of the deal.
Even better, use holidays to further promote your LTD. Offer them on Black Friday, Christmas, or other holidays.
So Is AppSumo Worth It?
AppSumo is a great platform for SaaS businesses to launch a lifetime software deal and other digital products. It can help you get your SaaS solution to its large user base. If your SaaS product passes its rather strict evaluations, you can enjoy a lot of benefits. Your product gets featured on AppSumo’s website, newsletters, and YouTube channel.
You also need to count the cost if you’re going to do this.
AppSumo has a very strict evaluation process before agreeing to promote your SaaS tool. And when you do, it can take a big cut from the revenue as commission.
Now, how do we answer the question “Is selling Appsumo lifetime deals worth it?“
For the many SaaS companies that have sold their SaaS products on Appsumo, the answer is yes. For HeySummit, it might even be a “heck yes.”
SaaSZilla: A Better Appsumo Alternative
While Appsumo pioneered the discounted SaaS deal model, SaaSZilla takes it a step further for software vendors with its higher revenue sharing and expanded promotional efforts.
With Appsumo’s popular “Select” program, vendors see only 10-30% of revenues from sales made through the marketplace.
In contrast, SaaSZilla allows vendors to take home up to 50% of revenues generated through their platform. This significantly higher revenue split provides SaaS companies more resources to put back into product development and growth.
Beyond the increased revenue share, SaaSZilla also provides a wider array of promotional opportunities to drive visibility, buzz and conversions for its partners. Their marketing activities include content creation like blog posts/videos, social media ads, promotions across private online communities, influencer and affiliate marketing and more.
Appsumo, on the other hand, primarily leverages its email list and marketplace visibility to drive sales of deals. This puts more onus on the vendors themselves to market and create hype around their offers.
The combination of larger revenue shares and more extensive marketing support makes SaaSZilla stand out as a more attractive platform for SaaS vendors looking to gain traction.
With Appsumo taking the lion’s share of revenues, vendors are left with fewer resources to scale their business.
SaaSZilla flips the script by empowering software companies with bigger payouts and unrivaled promotion to set them up for success beyond the initial deal.
Learn more about the benefits of partnering up with SaaSZilla here.
For more tips and strategies on growing your SaaS business, visit our SaaS marketing blog here.