Five months ago, with no prior sales experience, I launched a new startup selling Photoshop Layer Styles. I've been building ad-supported sites for a few years, but this was my first attempt at actually creating and selling my own product line.

Last week I made my 100th sale. To celebrate, I'm publishing my sales numbers (scroll down if you want to peek) and sharing some lessons I've learned along the way:

Things That Worked

An Intense Focus on Product Quality

I spent the vast majority of this summer photographing wood, marble, and metal surfaces, importing the images into Photoshop, processing the heck out of them, and turning them into layer styles. I literally shot thousands of pictures, edited thousands of textures, and created thousands of styles.

In the end, almost none of them made the final cut.

The problem with repeating the same process over and over is you eventually get better at it. Suddenly the work you did last week doesn't look as good as the work you did today.

I'm a bit of a perfectionist and don't like to ship anything but my best work. So, naturally, I ended up redoing everything multiple times. Drop shadow not quite right? Redo everything. Colors too dark? Redo everything. Resolution too low? Buy a new camera, revisit every location, reshoot everything! Yes, I really did that.

Ultimately, I think this dedication to quality paid off. I really believe I've created the best collection of layer styles ever made, and my customers have been echoing that sentiment in the comments and emails I've received.

Going Indie

I wasn't interested in signing an exclusive contract and giving up half my profits to join one of the popular digital marketplaces. They might have more traffic, but most of it goes to the guys entrenched at the top of the sales charts. I knew I could do significantly better opening my own shop, so that's exactly what I did.

Fortunately, I'm fairly skilled with Drupal, and putting a site together was actually pretty simple. My biggest win here was going with FastSpring. They take care of everything from the shopping cart to sales tax to payment processing to file delivery. I haven't had a single major problem, and they even pay out on time, directly to my bank account. I can't recommend them enough.

Drupal

One of my big successes was getting on the front page of Drupal.org (I wrote a detailed case study). This early exposure drove most of my first sales (thanks Drupal fans) and kept me motivated as I worked on creating additional products for the site.

Hacker News and Reddit

Both of these communities provided me with invaluable early feedback. Reddit was especially harsh. Nobody wants to hear "your site is ugly and you charge too much", but committing to an early site redesign probably saved my business. If your landing page doesn't inspire confidence, no one will buy your product, no matter how good it is.

AdWords

Roughly a quarter of my sales came directly from advertising on Google. This is a complex topic, and I hope to devote an entire article to it in the future, but for now I'll just say: It's easy to make sales with AdWords, but hard to make profits. Expect to throw away money learning the ropes.

Mistakes and Failures

Understanding The Market

I dove into the layer styles niche with a lot of optimistic naivety. I knew people would be willing to pay more for a superior product, but I overestimated by how much. Style packs I thought would go for $50 ended up selling for closer to $20. One of the problems with niche markets is the difficulty of exploring the demand curve. Getting enough data points to support or reject your pricing strategy can take weeks, and you'll probably be losing money in the meantime.

I also put too much faith in Google's Keyword Tool as an accurate representation of market size. When I started this project, Google was reporting 33,000 monthly searches for "photoshop layer styles". Today they're only showing about 6,600. Based on my traffic, I'm confident this is just Google improving their estimates, and not an actual decrease in demand. The market still exists, it's just smaller than I expected.

Understanding The Customer

Another of my mistakes was approaching the market from an expert's perspective. I'm deeply familiar with layer styles, but most of my potential customers aren't. In fact, the majority of Photoshop users probably don't even know downloadable layer styles exist. My marketing and advertising strategies really failed to take this into consideration.

(To make matters worse, Adobe ships some pretty ugly default styles with CS5. It's easy to see a few 90s-era "glowing text" styles and dismiss the whole concept as junk. In reality, you can create some amazing effects with enough time and skill.)

Getting Coverage

If I want to expand my business in 2011, I need to find better ways of reaching the average Photoshop user. So far, this has been my toughest challenge.

I've had particular trouble getting coverage from blogs. I spent a few days tracking down about 40 Photoshop bloggers, and sent each one a personalized email with an offer of free products to give away (5 copies of the complete collection, if you're interested). Only one of them bothered to reply: "I'll do it if you send me $500 first". Paying to give my work away seemed kind of ridiculous, so I declined, but given the lack of responses, maybe these kind of bribes are the norm?

Organic Search Traffic

I figured with an exact-match domain in a niche market like mine, getting to #1 for "photoshop layer styles" would be easy, but it just hasn't happened yet. Lack of coverage hurts here, but so does the newness of my site. It's particularly annoying being outranked by an obsolete .edu page written 10 years ago.

The Numbers

Total sales since launch topped out at just under $3,000 USD. It's a small start, but it was enough to pay my rent most months, and I have ambitious goals for the next year. Here's a breakdown of the exact numbers:

Units Sold

Revenue by Product

Revenue by Country

Everybody Loves Bundles

I must be doing something right because most people buy the complete collection. It's my most popular and highest earning product. In fact, I've had several customers purchase individual packs and then come back the next day to buy the whole bundle, even though they're essentially buying one of the packs twice. Clearly, I should implement some kind of discount for past purchases.

Conclusions

I'm only five months into this project, and I still have lots to learn and improve on, but I'm generally happy with the direction things are going. The business is almost "ramen profitable", and I have some great ideas on where to take it in the future. Now if I could just figure out how to get links from other bloggers...

Thanks

I'd like to give a special thanks to Patrick McKenzie (of Bingo Card Creator fame) for showing the world how to build a niche business, and to everyone on HN, Reddit, Drupal.org, and in #startups on Freenode for their advice and support.

Get In Touch

Thanks for reading. If you want to get in touch, leave a comment on HN or email me at john@blamcast.net.