Add on Software

By Nate McCallister

Last Updated June 15, 2021


"If you want to lift yourself up, lift up someone else."Booker T. Washington


If your goal is to create a software product and you're struggling to find your idea and market fit, pay very close attention. This article might change your life. It changed my life to the tune of over $1,000,000 in software profits across multiple, simple add-on software programs.

When we think of successful software products, most people will likely think of the big name programs like Clickfunnels or large social platforms like Facebook or YouTube.

I highly doubt that anyone would think of CF Pro Tools, an add-on to Clickfunnels that has earned multiple 7 figures for its creator.

TubeBuddy Total Users

It's unlikely anyone would think about the Chrome extension Group Convert, a tool that works with Facebook to allow group owners to collect emails from their members. A software that drives 5 figures per month to for creator Kim Dang.

Likewise, few people would have thought of TubeBuddy, a popular 3rd party add-on for YouTube that helps creators get more traffic and engagement and has over 1,000,000 downloads

While I'd love to have an ownership stake in the larger tools (which we will refer to as "mother programs" in this article), I'd be thrilled to have created any of the mentioned smaller, supporting softwares!

Why Add-On Software Works

This "software add-on" approach is beautiful for a number of reasons.

#1 Your target audience is extremely well defined and easy to locate.

Your customers are the customers of your mother program. As of 2021, targeting these users is easy. Simply running lookalike ads to the social media pages of the mother program gives you laser like targeting. Even though the pages are filled with many tire kickers or cancelled users, it's rare to find a lookalike audience that will be as densely packed with your most high value potential customers like these will.

#2 Your target audience has already proven they're serious.

This is warm to hot traffic from day one. The more expensive the mother program is, the more serious and potentially profitable the audience is. This more than makes up for the fact that the audience is "small" relative to the massive cold audiences broad mother programs will run ads to. This is a battle you get to sit out. There is no "cold" traffic campaigning for you since your potential users must also be users of the mother program. If you're running to cold traffic, you'll likely lose money because you'll need to make 2 sales (the mother program and your add-on) to earn anything.

#3 Your add-on doesn't need to do everything (or even much at all).

Your tool is a supplement, not a full blown replacement. If the mother tool does 100 things, yours might do as few as one! Seriously, sometimes one big thing done really well is all it takes to create a big winner. This simplicity also makes support and maintenance a breeze.

Also, due to the natural entrepreneurial desire to hit home runs (building unicorn companies like Facebook) most people overlook this low hanging fruit!

Downsides of Add-On Software

There are some downsides of course.

#1 Your software hinges on the longevity of the mother program.

If the mother program goes away, you go away. No one loves having a business that is so directly tied to another business that you don't control. Even a highly successful mother program runs the risk of selling to new owners who might make your add-on obsolete or make software changes that kill your functionality.

#2 Your software might be replaced by the mother program.

Having a relationship with the mother program is helpful but not a guarantee that they won't eventually make your software obsolete by adding your functionality natively for all users.

A software that goes through continual improvements (most great software do) is going to be at a very high likelihood of this happening.

Fortunately for you, some software products have no interest in adding additional functionality. It might not be worth the added costs and upkeep.

The catch 22 is that these types of stagnant products often go out of business 😬 The big exception being Clickfunnels, which has seemingly only gotten worse since I joined in 2015 yet it still has nearly 3x as many users as it did back then. But I digress.

#3 Your software might be easy to emulate due to its small nature.

There is usually in influx of knockoffs to add-on software products after the initial first to market tool proves to be a success. You'll have a lifetime advantage for being first to market, but that is in no way a guarantee of permanent market share. Over time, the better company wins. Whether it be through making a much better product or simply out marketing everyone else (usually it's the latter).

So it's not all sunshine and rainbows, but the potential for sunshine and rainbows is too high to pass these up. Remember, they're going to be smaller tools so you can be flexible and adapt when things change.

How to Identify Add-On Opportunities

I've been fortunate that the add-on opportunities that I've capitalized on came as a result of my own needs. This is extremely helpful to finding these opportunities. Scratching your own itch.

As a customer of the larger programs, I was able to see what was missing. I was in the target audience so designing the add-on in a way that was truly helpful was much easier.

This is the best approach and there is a level of serendipity involved. However, being mindful and regularly asking, "could I make a solution that fixes this shortcoming," or "could I make a solution that enhances my results," will speed up the process.

If you aren't seeing an itch you can scratch, start looking outward. See what other users are saying in support forums and on the software's social media pages. Read the FAQs of the software and see what questions are answered with "we don't currently support this feature." 

What are the pain points? What features have they been begging for but haven't been added? Where can you add power or solve a problem?

What Makes a Good Mother Program

Just because you've found an opportunity for improvement doesn't mean you've found an opportunity for profit. The audience might be too small to sustain your add-on or there might be other issues that make it not worth pursuing.

Consider the following when analyzing a great "mother program."

#1 An active user base

Size matters yes, but a user base of 10,000 diehard people who are willing and able to spend for an add-on each month can easily be worth your time.

Let's say you have an add-on to a popular email marketing program and you charge $19/month for it.

(10,000 * 3% conversion rates) * $19/month = $5,700 MRR

💡

Finding accurate active user counts and sales data can be easier than you think. Using sites like BareMetrics.com can show you way more information than most people would realize.

#2 A user base that can spend money

Clickfunnels Baremetrics Data

Surprisingly, sites like BareMetrics might show how many active users a software has. Here is ConvertKit's current data that proves that they have a thriving community of users who are willing and able to spend money.

Focusing on B2B tools is going to be the most lucrative approach here since most companies can easily recoup costs of software products that help their businesses. This is only more true year after year as software and A.I. replace the traditional workforce.

💡

Keep in mind, it would be odd for the add-on to cost more than the mother program. If the mother program has 5,000 active, paid users but charges just $29/month, it might be hard for you to make much money as an add on for them.

#3 A company that is supportive (or at least not your enemy)

At the very least, you need the "mother product" to not actively discourage you from leveraging their user base.

CF Pro Tools Testimonials

In most cases, this won't be an issue. CF Pro tools, for instance, actually got a promotion from Clickfunnels founder Russell Brunson

As a user of both CF Pro Tools and Clickfunnels, I admit that I do see a conflict of interest here since many of the features of CF Pro Tools are things that Clickfunnels should have added on their own but haven't. It seems clear that they aren't going to "step on the toes," of their sister product which is, in my opinion, toxic. But that's for another day.

If you can get a mother program to actually embrace AND endorse you like this, making sales is literally guaranteed.

Final Word

When I was in my early 20s, I was eating absurd amounts of calories and protein and lifting weights like I was going to be a bodybuilder.

The problem: I thought bodybuilders were weird and I had no interest in becoming one. The utility of going from really good but not abnormal shape to being 260 lbs of hairless steel was negative. It seemed like a miserable lifestyle that definitely didn't fit my personality, so why was I working like that was the goal?

After realizing how dumb this was, I chilled out. I went back to enjoying life and lifting enough to usually be the strongest person in the room but never the entire building.

This is what I see in many aspiring software entrepreneurs. They aim for Facebook results when they'd be perfectly content or thrilled to make an extra $5,000 per month somewhat passively.

So, how much money are you really trying to make from your software? If the answer isn't $1,000,000,000+, consider what you've just read and go find your mother program and your new add-on!

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About the author

Nate is the founder and main contributor of EntreResource.com. He is a lifestyle entrepreneur who spends his time building businesses and raising his four kids Sawyer, Brooks, Van and Lua with his beautiful wife Emily. His main interests include copywriting, economics and piano.

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