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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

#41

Post by eropple »

paganel wrote: post #30
sid6376 wrote: post #28

Earlier quoted context omitted.

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 you…

This is not a good solution. If you're emailing them generated passwords, you should immediately route them into a password-change workflow on login.

You shouldn't be "hoping" anything.

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

#42

Post by wtracy »

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…

I would point out that elementary school teachers are not likely to be very tech-savvy, and would probably be toward the high-end of amount of support required.

YMMV.

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

#43

Post by dualogy »

chadgeidel wrote: post #39
MicahWedemeyer wrote: post #37

Earlier quoted context omitted.

We treat all equally. Maybe bad business, but I don't feel right just letting people twist in the wind.

Well, sure. I'm not suggesting ignoring them, just prioritizing them.

That's precisely what I do -- I have to -- needless to say deprioritized users feel fully "ignored".

That said, you can't please everyone... if you're the one left serving the lowest-IQ users with the lowest-or-no-budget, you just give others an easier time making good money off more savvy software users. Before you know it, you have to close down shop for good...

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

#44

Post by idlewords »

falava wrote: post #16

I really liked the Pinboard.in pricing scheme: start with very low prices (something like $1 subscription for life) to get passionate users talking about you and progresively make that price higher based in the number of users you get. No free plan to fight link spam. And a premium yearly plan that archives the content of your links.

Yeah, but the archiving plan only comes out to $2/month per user, which according to this article means I should shut down the site!

It's a shame, since I was enjoying the profits.

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

#45

Post by idlewords »

jdunck wrote: post #20
patio11 wrote: post #2

It is exceptionally difficult to run SaaS businesses with low price points, principally because you'll often be cash flow negative with regards to marketing spend. e.g. even if the LTV of a customer is a few hundred dollars, to scale the business, you may well be paying $200+ in customer acquisition costs. (Check the price for AdWords clicks on e.g. project management or invoicing sometime. Oofdah.) If you quickly re…

One rule of thumb I read here ( http://www.forentrepreneurs.com/startup-killer/ ) is that CAC should be recoverable within 12 months of use, regardless of LTV. Do you think that's appropriate, or it needs to be even faster? I get the point cashflow limits rate of growth, of course.

Another good rule of thumb is not to speak in acronyms.

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

#46

Post by idlewords »

patio11 wrote: post #2

It is exceptionally difficult to run SaaS businesses with low price points, principally because you'll often be cash flow negative with regards to marketing spend. e.g. even if the LTV of a customer is a few hundred dollars, to scale the business, you may well be paying $200+ in customer acquisition costs. (Check the price for AdWords clicks on e.g. project management or invoicing sometime. Oofdah.) If you quickly re…

I strongly disagree that you need to pay anything to snag customers for an online service. Build a really good initial version, work your heart out to support it, and let word of mouth do the rest. It will be frustratingly slow to begin with but it ensures you are always in the black.

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

#47

Post by idlewords »

callmeed wrote: post #27

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…

It's important to bill for multiple months of service at a time if you sell stuff at the $1/month level to avoid this problem. The transaction fees become prohibitive when you get below $5 or so.

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

#48

Post by SteveC »

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…

I've had a few customers like that. What I eventually did was make it possible for them to be logged in automatically by visiting a unique URL. Horribly insecure, but it's not a service that needs high security.

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

#50

Post by joshuacc »

eggbrain wrote: post #31
revorad wrote: post #25

Earlier quoted context omitted.

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

My weekend is only worth more than $50 if I didn't enjoy programming it, or it took time away from making money from another job. If I was planning on sitting around watching television, but instead spent it programming this project that wouldn't somehow make the weekend worth less, in fact I would argue that it built value, intangible or otherwise (knowledge learned from building the application that I can put on my…

"My weekend is only worth more than $50 if I didn't enjoy programming it, or it took time away from making money from another job."

Or if you would have enjoyed doing something else even more. Opportunity costs. :-)

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