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9 Comments

How to charge for my extension?

Hi, I'm building www.BuyLocalized.com. It's a browser extension that overlays Amazon with information about where products come from (right now just the USA). We built this because we were pissed off about China and didn't want to buy stuff from there, and it was too hard. I'm looking for some ideas on monetization.

Because we have to do a ton of research the extension needs to generate quite a bit of revenue to have a chance. Building it is a half year project for 4 full time people, and maintenance will be 1 or 2 full time jobs. I've been trying to figure out a way to monetize and I wanted to bounce ideas off of people here. In order of best to worst:

  1. Subscription. We are thinking we will show our users 5 or 8 products for free, and then you need a yearly or monthly subscription to see more listings than that. 5-8 products is a workeable amount, so subscribing wouldn't be mandatory. A big issue is this requires a lot of products. We are researching already but for some categories there won't be enough products for the premium version to show anything, and if we expand to other countries then for a lot of them there won’t be enough options that exist to make it worthwhile.

Pros

  • Our interests are aligned with our users.
  • It is easy to implement.

Cons

  • It won't be much money. I haven't researched on what other companies
    experience, but I imagine this won't convert very often and we would need
    an enormous user base to support the team.
  1. Affiliate. We could add affiliate links and collect revenue when people buy something. Amazon won't let us collect affiliate revenue from them for this extension, not 100% sure but almost. So we would need to research and add other companies tot he extension, and that has a lot of negative effects on user experience. It would also take a long time, if we did go and add thousands of other companies, we would need to make deals with each of them and it would be a huge task.

Pros

  • It would be lucrative. The people who use our app are buyers, the
    average prime holder spends 1050$ a year on Amazon. Affiliate deals for this
    type of stuff is 5-15% usually I believe.

Cons

  • Interests with our users aren’t completely aligned, as we would want to
    show them products we get a cut on.
  • Exceptionally difficult to implement, as I understand it currently we would
    need separate deals with thousands of companies.
  • Our extension may serve as a product discovery engine, so people will use it
    once then buy direct next time, which could potentially result in us getting
    a lot less sales than we expect.
  1. One time sale. This just seems clearly worse than the other options, but maybe it’s not?

Pros

  • Simple

Cons

  • If the extension fails then we would abscond on our responsibilities.
  • Only make money once
  • Need a constant flow of new people
  • Need to convince people to buy before they use it, which may be hard.

Another point is the cost of getting new users. Currently it costs 3$ to get an install of our currently free extension through paid social channels. I am confident that I can get this down to 1-2.5$. This is a breakpoint for the project, if we can get our lifetime spend from an average user above this we can advertise. This is the shining light of the extension I think. We’ve got 250 users currently, and we’ve had almost no uninstalls. People have seen/used our extension 100’s of thousands of times, though it is just a little box on Amazon. We’ve gotta find a way to generate 4-5$ in revenue over the lifetime of a user. I think that’s going to be hard, but I’m hopeful there is a route to it.

I would love to hear from other people! I’ve never built a SaaS project, and haven’t had to think of how to monetize something like this before.

on April 26, 2020
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    In the short term my advice would be to keep it free simply to grow the user base.

    Extensions, much like mobile apps, do not sell for a lot and amount a user will pay directly reflects utility of the app. At best, this is a novel way to browse and add a bit of value to Amazon, but practically speaking, I do not see a user paying for this service. And I do have a bit of experience in this field.

    This really leaves either affiliate revenue or direct Amazon seller promotion. As you mentioned, Amazon does not allow affiliate revenue from apps or extensions, and it would be a complex process to get it through (tho not impossible). IMHO, direct seller promotion may be a nice key here. Every Amazon seller looks for a leg up over their competitors in any category, so you highlighting a seller / item or otherwise promoting them would be very valuable to them. That however is going to be directly proportional to your user base.

    You mention expenses of 10k/month -- what are you spending it on if you don't mind me asking? Also, feel free to reach me off site.

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      Research, it's extremely time consuming to find out where things come from, and the amount of products we need to be able to deliver decent results is huge. We are at 160k listings currently, and anticipate it will be 3-400K before we start giving people great results the majority of the time.

      Your extension seems very similar, I'd love to talk to you. I don't see an easy way to contact you off site though, you could email me at gareth@BuyLocalized.com.

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    Keep it free. Keep growing your customer base and use affiliation to earn money. If you have enough customers I am pretty sure that sellers would be happy to work directly with you

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      We've got expenses of almost 10k a month, we need extensive growth to be able to keep doing it without a reasonable monetization plan, and the affiliate stuff will be very hard to do.

  3. 1

    Keep it free and push occasional high ticket ads man. Maybe later you can switch to an "American build" only affiliate.

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    Honestly: Honey sold for $4B, Get some VC money so you can keep it for free for a year or two.
    Dive deeper into the affiliate model, prove it 100% won't work before going on. This sounds absolutely perfect to monetize through affiliate deals. And double check your info is correct that you're making money off of one item you show. There's ways to make money no matter what the customer buys, if you're the last click.

    And look for the largest other platforms or sellers that would want to partner with you. Look to large retails that primarily manufacture outside of China.

    You presented Subscription and Affiliate: Try selling 100 for $99 lifetime value. That should get you a couple months runway to build out more.

    Also try monetizing by Ad Revenue. Amazon itself makes $2.7B in ad revenue. There's opportunity there. And might be the "simplest" way to make some cash from users.

    Also consider combining two or more revenue streams. Ad Revenue. then Pay to turn off ads with Subscriptions.

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      I'm happy keeping it free and fund it if we get a lot of growth. In the next few months our goals are either to see significant, 100+ daily organic installs, or to get a good idea on monetizing.

      As to the affiliate, there's a lot to talk about. We haven't applied with Amazon, but based on what we've read and what our extension does we think it's very unlikely that they are willing to accept us. We don't really drive much new traffic to Amazon, and they won't want to give a cut to a piece of software that effectively allows people to filter in a way Amazon doesn't want you to. they did however massively slash their affiliate commissions this week, so that might make them more willing to take new people on.

      What we are thinking is adding items from other stores into our extension. So a good part is that most brands that manufacture in the USA aren't on Amazon, like 70-80%, so we would be able to add a lot more choice for our users. However it makes the shopping experience a lot worse, if our users need to go and make an account on a new site, and possibly deal with scammers or slow shipping speeds or whatever. On top of that technically it would be hard, as our search takes a lot out of what Amazon has already done. The biggest point though is working out affiliate deals. Quantity of choice is essential in making a good product, so we would need to make individual affiliate deals with thousands of little websites, and that would be a huge challenge, most of them won't have done it before.

      An issue with ads is that while people are shopping the ad networks would want to give them product recommendations. But we can't have foreign produced goods showing up in our extension, that would ruin the experience. I haven't played around with how much choice we have in terms of what shows up, or the difference in CPM. I will check it out though.

      Thanks for your ideas!

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        Re: Ads. Then consider ad networks that are tangential or you know can keep to your standards.
        BuySellAds... only promote software (made in U.S.A.)
        Create your own ad network. SellLocalized.com is available to buy.

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          And you can inject product listings on Amazon pages through your extension.

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