Software Business in the Middle East

Our distributor in Saudi Arabia has sent a calculation of retail sales if we want selling our software in computer shops and book stores. This is how the calculation looks like using a price of $100 as an example:

– Retail store takes 40% from the price that is $40;
– Distributor takes 40% from the rest of the price that is $24;
– We get 36% from the price that is $36.

Some very large and well known stores request 50% of the price. In this case distributor would get $20 and we get $30.

It all means that if you want selling your product in retail stores, you might get between 30 to 36% from your original price. It sounds sad. Is it really so that even such large companies like Microsoft get so low percent from their retail sales too?

I thought this is because people in Saudi Arabia are just very good traders, so this is why they ask for such high percent to sell our products in their stores. But then I found this article that also discusses retail sales for software. The article gives even worse numbers of 5-10% that developer would get from retail sales. Comparing to these numbers, the offer from our distributor looks much better.

It leads to the fact that you can use retail only as a marketing tool to spread out your product to as many people as possible, because income from these sales would not be really much. If your users see your software on shelves in a computer store, they will at least be aware this software exists.

Have you had an experience selling your software in retail store? It could be interesting to learn about your experience.

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