AppSumo– From $3M to $80M in Annual Revenue

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Good morning! It's Friday, July 21st - Today we’re covering how Ayman Al-Abdullah took AppSumo from $3M to $80M in annual revenue in seven years.

THE FEATURE

AppSumo- From $3M to $80M in Annual Revenue

When Ayman Al-Abdullah joined AppSumo in 2015, the company was generating $3M annually and was strapped for cash. But under Al-Abdullah’s guidance, the company now generates over $80M in annual revenue.

Let’s analyze AppSumo’s business model and uncover some of Al-Abdullah’s advice for bootstrapped companies looking for success.

What’s AppSumo?

AppSumo is a software deal marketplace that distributes digital goods and online services. However, their deals are unique in that they only offer lifetime deals but do so for a fraction of the annual software subscription cost.

Software companies looking to boost their brand recognition partner with AppSumo to produce ad copy and promote their business to 700,000 Sumo-lings (AppSumo’s fan base of active subscribers).

On the consumer end, AppSumo appeals to entrepreneurs looking for invaluable software investment opportunities. For example, AudioHero provided lifetime access to their library of 250,000+ audio files on AppSumo. Video marketers jumped on this opportunity to gain lifetime access to royalty-free audio assets.

AppSumo’s unique business model generates revenue from both partners and customers

• Partners: When companies partner with AppSumo, they enter into a 50/50 revenue split on all sales. However, 40% of all revenue is invested in marketing, payment processing fees, and affiliates. So, the remaining 60% is split 30/30.

• Customers: AppSumo Plus is their premium membership account that costs $99 a year for an additional 10% off on all purchases. This deal provides tremendous value to AppSumo users considering that the bulk of all purchases come from premium members.

Al-Abdullah’s Advice for Growth

Leverage your partners and consumers for growth

Generating sales leads and acquiring more users for a platform can be immensely difficult, so Al-Abdullah created two referral programs for both consumers and partners.

• Friendbuy: Friendbuy is an altruistic referral model that is advertised to users as “Give $10, Get $10”. Users can send a referral link with a $10 coupon to a friend and receive $10 in AppSumo credits when the friend makes their first purchase.

• 130% Partner Commissions: Software companies that partner with AppSumo can avoid the standard 50/50 revenue split by bringing new buyers to the platform. When partners send a lifetime deal link to their cold call lists and it results in a sale on AppSumo, they receive a 130% commission on the transaction.

Utilize part-time workers early on

For a company making $3M a year, hiring full-time employees is an expensive investment. So, Al-Abdullah hired part-time workers and interns to manage specific aspects of the business. This allowed Al-Abdullah to focus on sales and grow revenue by 30% in his first year.

With the extra revenue, AppSumo could hire full-time employees and a sales team which freed Al-Abdullah to focus on visionary projects years in advance to promote growth.

When giving advice to entrepreneurs struggling to find affordable labor, Al-Abdullah recommends looking for students who want a side job, moms seeking to get back into the workforce, or even outsourcing work overseas.

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