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You Can’t Make Money Charging $1 Per Month

softwarebyrob.com

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Re: You Can’t Make Money Charging $1 Per Month

#21

Post by MicahWedemeyer »

WA wrote: post #4

Obviously, the main argument against a $1 per month is the fact that you need to provide a lot of support. From my experience, this depends heavily on the target audience I guess, but I completely disagree. I ran a website for a couple of years without thinking about turning it into a business. Finally, shortly before I graduated, I decided that I need to make money from it, otherwise I can't sustain it any more. Ove…

As a counterpoint, on my site (Obsidian Portal), support is a big drain (both timewise and mentally). Further, it has little to do with paid vs free (we're freemium). Both groups demand support, and the freebies are often the most angry.

For example, every day I'm dealing with someone who is convinced that the login system is broken. It's always user error, but it requires input from me pretty much every time, to the point of "here is a new temporary password. i've tested it and it works. please copy and paste it in"

Yes, we have an automated "forgot password" feature, but no matter how much automation you add there will always be people who avoid all that and demand personal attention.

Re: You Can’t Make Money Charging $1 Per Month

#22

Post by MicahWedemeyer »

eggbrain wrote: post #7

Isn't there a point where the service isn't worth the monthly cost though? For example, I was looking for a service to do something very specific. It was something I could probably code in a weekend or so, but I figured there was some free or cheap site out there that could do it better. I did find a site that did exactly what I wanted, but it charged $5/month, or $50/year. Now for me, the service was at best a novel…

You can code it in a weekend (doubtful...but let's assume). Then you'll spend countless weekends trying to attract customers. Nobody attracts "a good portion of the market" by doing nothing.

The technical side is always much easier than everything else involved in running a business.

Re: You Can’t Make Money Charging $1 Per Month

#23

Post by jconley »

akat wrote: post #13

Serious question - Wonder how LastPass makes money then? (free or $1/month) Or can we say that once you have acquired x number of customers at %5-7/month, it may then be easy/feasible to switch over to $1/month model since you already have a "traction" at this point

Maybe they don't? Not that I know the details of their business, but I know I was shocked when I first learned how few companies actually make money. :)

Re: You Can’t Make Money Charging $1 Per Month

#24

Post by kevinpet »

I believe it, because I think the demand side is actually not too different at $1 vs. $5. There's not a lot of difference between the hassle of me getting out my credit card to pay for something at $5/month vs. $1/month. Maybe I value the hassle factor at about $5. So I only need twice the value out of the $5 service, not five times as much.

Re: You Can’t Make Money Charging $1 Per Month

#25

Post by revorad »

eggbrain wrote: post #7

Isn't there a point where the service isn't worth the monthly cost though? For example, I was looking for a service to do something very specific. It was something I could probably code in a weekend or so, but I figured there was some free or cheap site out there that could do it better. I did find a site that did exactly what I wanted, but it charged $5/month, or $50/year. Now for me, the service was at best a novel…

You could probably code it in a weekend. Your weekend is worth more than $50. That is the point.

Re: You Can’t Make Money Charging $1 Per Month

#26

Post by jvandenbroeck »

So true, I made that mistake with my first business. Somehow, as a little kid, it seemed completely reasonable to provide cheap web hosting with A+ support to my clients. My grand financial plan: 50 clients * 12$ / yr - 60$ = 540$ easy profit - didn't work that well :-)

I was working my ass off, helping these clients, earning next to nothing.

Re: You Can’t Make Money Charging $1 Per Month

#27

Post by callmeed »

Not to mention the fact that lower price points often pay higher % fees to payment processors because of per-transaction charges. Even PayPal micropayments is gonna take 10¢ on the dollar. My merchant account with BrainTree takes 30¢ per transaction plus a %. I don't know if some merchants offer different rates for micro payments but at that rate, you're talking about losing 30 to 35% of that $1 payment.

You might as well just build some iOS apps for you niche at those numbers.

Re: You Can’t Make Money Charging $1 Per Month

#28

Post by sid6376 »

MicahWedemeyer wrote: post #21
WA wrote: post #4

Obviously, the main argument against a $1 per month is the fact that you need to provide a lot of support. From my experience, this depends heavily on the target audience I guess, but I completely disagree. I ran a website for a couple of years without thinking about turning it into a business. Finally, shortly before I graduated, I decided that I need to make money from it, otherwise I can't sustain it any more. Ove…

As a counterpoint, on my site (Obsidian Portal), support is a big drain (both timewise and mentally). Further, it has little to do with paid vs free (we're freemium). Both groups demand support, and the freebies are often the most angry. For example, every day I'm dealing with someone who is convinced that the login system is broken. It's always user error, but it requires input from me pretty much every time, to the…

Would it make sense to have an automated email to the effect of "Thanks for contacting us. Here are the frequently faced problems." ?

Re: You Can’t Make Money Charging $1 Per Month

#29

Post by ssharp »

plamenv wrote: post #18
mikeryan wrote: post #15

Earlier quoted context omitted.

LastPass does it the usual way - they've got a premium (enterprise) product which they sell for $12-$24 per user per month. They can then write off any losses from the free product. https://lastpass.com/enterprise_roicalculator.php

That's $12-$24 per year, not month. And they can do it simply because of sheer volume. Everyone has to deal with passwords so their market is humongous. If you sell to teachers that's not the case.

Selling to 100 users inside of one company is a lot different than selling to 100 individual users scattered all over the place. Company IT is likely to be the first point-of-contact for issues, which would decrease LastPass's support requirements by quite a bit.

Re: You Can’t Make Money Charging $1 Per Month

#30

Post by paganel »

sid6376 wrote: post #28
MicahWedemeyer wrote: post #21

Earlier quoted context omitted.

As a counterpoint, on my site (Obsidian Portal), support is a big drain (both timewise and mentally). Further, it has little to do with paid vs free (we're freemium). Both groups demand support, and the freebies are often the most angry. For example, every day I'm dealing with someone who is convinced that the login system is broken. It's always user error, but it requires input from me pretty much every time, to the…

Would it make sense to have an automated email to the effect of "Thanks for contacting us. Here are the frequently faced problems." ?

> Would it make sense to have an automated email to the effect of "Thanks for contacting us. Here are the frequently faced problems." ?

It depends on the target audience. If it consists of geeks/people familiar with computers from an early age, then, yes, they might read that, otherwise you're going to do what MicahWedemeyer does (and what myself I'm doing, for a Groupon-clone website targeted to women): emailing your users predefined passwords, hoping they'll actually change them after the first time they use them.

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