HACKER Q&A
📣 QueensGambit

Why does software demand stay consistent when there is unlimited supply?


I understand essential goods like food are constrained by both demand and supply. But, why does software demand stay so consistent? For example, my addon [1] gets 40 - 50 installs per day like clockwork. When I was a newbie, I used to worry that everyone will install/uninstall my software on the same day during launch and I will run out of users sometime soon. I learnt it doesn't happen that way. But, I haven't figure out why. Why is that 40 - 50 people discover my software everyday consistently, when there is no supply constraint?

[1] https://gsuite.google.com/marketplace/app/formfacade/743872305260


  👤 CameronBarre Accepted Answer ✓
You're getting some things mixed up.

We must be careful when comparing tangible goods (like food) to intangible goods (like a browser app).

Food has an element of genuine scarcity. This scarcity is what causes food to have economic character. If there is more demand than supply, this state of things triggers investment into the production of more food to satisfy the demand some time in the future, ultimately affecting prices. Prices will rise in the short-run, but decrease in the long-run (if the demand can be met, and then some). If food was not scarce, it would not be an economic good, and it would not be subject to supply and demand.

Software, on the other hand, is intangible. It can be duplicated and distributed, essentially for free, and more or less forever. Even if you have a paid plan this does not create scarcity. We shouldn't think of software the same as we think of food in terms of economics.

What is the theoretical limit to how many paying customers would be so many, that it impacts the ability of new customers to install, pay for, and use your app? Practically, this question is insignificant, that's one of the reasons software is interesting.

The simplest answer to why 40 - 50 people discover your software per day, is that whatever marketing channels you have utilized (or not) up to this point in your apps's lifetime expose you to 40 - 50 users per day who have a direct need that they think your product may solve.

The second element to this is that there are a lot of people in the world. As others have pointed out, they don't all have the same information. You are capturing a fraction of the total number of people out there looking for a solution to this specific problem, who are influenced by, or aware of, at least one of the marketing channels that influence your app.

If the problem your app solves became a non-issue overnight (for everyone), then you would see that number start to decline over time or go away instantly.

What's more likely to change the situation (temporarily or permanently) is that something changes (positive or negative) with those marketing channels, either influenced by you, or by whatever entities or forces control those channels.

Hope this helps.


👤 adventured
Because supply constraint (or lack thereof, 'unlimited' in this case), is not the only constraint factor acting against your situation. A constraint of awareness is also acting on your situation with the addon. Demand is potentially (very likely) hindered by awareness constraint. In this case, with an addon, if you're seeing a quite consistent uptake daily, with unlimited supply, it probably means your awareness factor is consistently acting on your situation as well.

An older and quite predictable example of this in action, would have been during the glory days of SEO, where based on consistent search engine rankings, you could expect highly predictable traffic to flow in day after day (still somewhat true today, it's just no longer as easy to game to the result you want). That's Google acting as arbiter of the awareness constraint.

It's an incomplete picture, when you've heard people talk about supply & demand as if they're the only constraints occurring. The context is usually far wider and more complex than just those two constraints, there are usually many constraints.

As a simple example, if you have an unlimited supply of eggs and you're giving them away for free, it doesn't do you much good if you have no awareness such that people don't know about the free eggs. The awareness factor is the constraint rather than the supply and it is keeping demand at zero. Supply without awareness equals zero demand.


👤 CyberFonic
It really depends on your marketing. If you simply display your app on G-Suite Marketplace, then people will discover your app by searching for specific terms. In the absence of some specific event to cause an increase in searches for the relevant terms you simply see a steady state. If you were to do a well targeted marketing blitz then you might see a short-term spike in downloads.

👤 econcon
It's mostly because market doesn't always have perfect info available.

There are always people who hear about goood things from someone who is fixated on particular software or has grown intimate and comfortable with one, then others might follow him and get on the same bandwagon even if that software is of last generation. It happens.