Pros and cons of software business

By Miracle Enweremadu and Lanre Williams
In Nigeria News Feed
Feb 8th, 2014
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Softwares drive today’s digital business. This report by Miracle Enweremadu and Lanre Williams examines how entrepreneurs are making a killing by selling softwares

In general parlance, when one talks about computers, what easily comes to mind is hardware. However, in today’s world, the most important components are the softwares.

Very integral is this aspect of computing that it has arguably become the most thriving sub-sector in the IT field. Hence, market is flooded with a plethora of softwares capable of solving a wide array of tasks in virtually all spheres of human endeavours.

And while developers hope to create the next big software, the sellers, either operating from swanky computer shops or under the sweltering sun, thrive in selling these softwares. They know they have hot-selling markets which patrons must purchase before the computers can be of any sense. The importance of what they do and the huge patronage they enjoy has ensured many youths are taking to selling softwares, whether legitimately or illegitimately. Welcome to the world of the software peddlers!

While some of those selling softwares come from an IT background, some are gatecrashers, as a matter of expediency. And of those in the latter category is Godspower Okafor, an Abia State Polytechnic graduate who sells softwares at the popular computer village in Ikeja, Lagos. According to Okafor, he started selling softwares as a means to make ends meet. “I have to cater for myself,” he said. “And I love selling this (softwares) because this is what I know very well.”

However, he knows just love for softwares would not ensure his business take off. Dealing in softwares, like many businesses, can be done in scales.

“The capital differs from different traders depending on how you want to start it,” he said. “For us selling original software, the capital which is determined by so many things may be expensive. For instance, a shop for a year may cost about 200, 000 naira depending on where it is situated. Decorating the shops costs above 100, 000 naira, generator-running cost is there too. Then microsoft copy costs around 15, 000 naira, corel graphics around 18, 000 naira. There are still some other costs which when added will determine the capital needed for the business.

You also need to carry out a market research, so you will be able to know the worth of the goods and what your customers need. The next is to know where to get the goods. Then, you stock it, do budgeting and create awareness for people to know where you are.”

Though business has been good, Okafor confessed that it has not been a tea-party because of numerous challenges he faces. One of those challenges, he said, “is the diversities in price of goods due to buying from different companies who offer different discounts.”

According to him, this price discrimination could have far-reaching effects to the point where some traders are forced to sell at higher prices than others, thereby ensuring those that sell at higher prices are not well-patronised.

“This price differences also sometimes make those who deal with pirated ones seem to make more money than us because they seem to have more customers,” he said. “Again, market may not be working well sometimes due to some reasons like weather conditions, among others. Customers may also not be many. Sometimes, software may not be working well and this affects the sale of such software. Then one would need to return it, which sometimes is very hard to do and looks somehow.”

On how he sources his goods, Okafor said the softwares can either be gotten locally or imported. “But, as for me, I import my goods from abroad,” he said, “because many things you see here at home may not be quality enough.”

Though there are recommended retail prices for the softwares, he and his customers still engage in haggling. This way, his profits fluctuate from high to low depending on some factors like bargaining power. According to him, “to keep customers, sometimes one sells at a low price which reduces profit. I make like 500 naira profit on one sometimes and like 3000naira profit on softwares daily.”

Okafor also said a level of training is required for those interested in coming into the business. “You have to know what you are selling,” he said. “One has to be trained on versions, models and names of softwares to help you explain to your customers when they ask some questions. You also need to go for computer training and learn more about these softwares and as well as learn how to install them too.”

He said his business is registered but wouldn’t divulge the details because he wasn’t the person who registered it. And as regulation, he said this goes on in form of taxation and monitoring of prices by appropriate bodies.

But unlike Okafor, many software sellers, especially those that hang around in corners in the sprawling Computer Village, specialise in selling bootlegs. And one of such persons involved in this is Emmanuel Udeyi, an HND Business Studies graduate from The Polytechnic, Ibadan. Udeyi who finished school last year plunged into the trade after efforts to secure a job proved abortive.

“I won’t want to involve myself in illegal things like armed robbery or continue to sit idle at home,” he said. “I searched for job but couldn’t find any, after I had distributed my CV all round, passed interviews but was never called for appointment.”

According to him: “The pirated software selling business can be started with a little amount of money, based on the amount you want to start with, large or small and there is no penalty for selling pirated copies of software.”

Though selling pirated softwares is criminal, Udeyi thinks lightly of that.

“I produce most of them myself,” he said. “I just copy them from the original ones.”

For now, he is just happy that he is not idle again and can feed himself from the proceeds.

Though the income he gets is not constant, he said his daily profits is in the range of N1,000 and N1,500.

A third seller, Chidi, a graduate of Business and Project Management from the University of Uyo, who also studied abroad, sells original softwares, also at the Computer Village.

Chidi stated that the business can be started with any amount depending on the size the person wants to start with.

Chidi, who travels to America, England and other parts of the world to buy his goods, mainly anti-virus softwares, said the challenges confronting him are many. “Money must be there always to promote the business. When one does not have money, the business suffers. Sometimes, people might be looking for a type of software that you don’t have. Meeting up with the varieties and latest versions of software may also be challenging. Customers sometime price down on softwares,” he informed.

He also said that dealing in anti-virus softwares is not lucrative, hence his “profits are not really attractive.”

Unlike many of his colleagues, Chidi registered his business with the Corporate Affairs Commission (CAC). And he believes, like other types of businesses which require training, selling softwares is not an exception.

“You have to know the names of the softwares and their uses and try to know what names other sellers and buyers call them; because, most times, buyers call them different names.”

He, however, said the marketing must be intensive.

Another trader is 25-year-old Sebastine Egwu, an SSCE holder who hails from Delta State. And like Udeyi, he also sells pirated softwares. In his own case, failure to secure admission into a tertiary institution was what forced him into selling softwares.

“I have to hustle for myself,” he said.

According to Egwu, “For one to start this business, one must know about computer software and how they are graphically designed, so as to know what your customers want, and know what to buy in the market.”

Egwu, who registered his business with about N30, 000, said he gets his goods from ‘fellow dealers’ outside the Computer Village. He also said the selling of softwares is a business that can be started with as low as N30, 000 or lesser. “Then you must have enough money with you,” he emphasised.

Egwu also said that while the weather and climatic conditions determine his sales, “sometimes, when I am lucky, I make like 5,000 gain in a day. I make lower sometimes.”

Amongst his challenges is the fact that customers often haggle down the prices of his goods and also that “most times, I do not have the latest versions of the software which customers might be asking for.”

To be prepared for the business, Egwu advised: “You must learn computer and know it very well especially graphics because your customers could question you on the uses of programmes like autocad, microsoft office etc.”

In all these scenarios, whether these entrepreneurs are legitimate or otherwise, they render a useful service, which without many computers would just be empty contraptions devoid of basic functionalities which many people have taken for granted.

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