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Underscore Price Dynamics

marco.org

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Re: Underscore Price Dynamics

#51

Post by marcamillion »

jbigelow76 wrote: post #34
spolsky wrote: post #15

The only business models I want to work on any more have some mass-market component that is absolutely free, and a niche companion product that makes money off of the exhaust fumes of the mass-market component. The last two businesses I started are Stack Overflow, which is free, where the careers business on the side makes money on the small fraction of Stack Overflow users who are looking to get better jobs, and Tre…

>What Marco is reporting here is that the old-fashioned "make something and get people to pay for it" business is much harder to pull off and likely to always be left in the dust by someone making the same thing for free, getting 100x the user base, and getting 1% of them to pay for some value added feature. Joel, do you see bootstrapping as viable in your ideal market or does it become a VC only game?

Depends on your definition of bootstrapping.

Joel started both SO & Trello bootstrapped off of the revenues of FogCreek, if I am not mistaken.

So don't see why he would disagree with seeing bootstrapping as viable.

Re: Underscore Price Dynamics

#52

Post by icelancer »

ghshephard wrote: post #24
krmmalik wrote: post #19

Earlier quoted context omitted.

What are your thoughts on say something like a video course? i.e giving it away for free and doing an upsell on consulting or stick to charging for the course?

That's the twitter/blog model for a lot of people. They give away really great content, build their brand, and then hold conferences/sell t-shirts, etc... The only challenge with that is you have to be really skilled/gifted to get traction in a very noisy environment. The other challenge with something like "consulting" - is that you don't get a lot of opportunity to scale - you are limited by the number of hours a d…

>The other challenge with something like "consulting" - is that you don't get a lot of opportunity to scale - you are limited by the number of hours a day you can work (as opposed to conferences, where you are limited to the size of the venues you can book/fill)

Ideally, you do both. One fills in the gaps for the other depending on the cycle of product/service you are in.

I did what you outlined in the first paragraph in a niche market. I have huge foothold, though it took me 4-5 years to get here, and there's a lot of upward mobility to still be had.

I travel a lot during the fall/winter for conferences and large group projects, and do a lot of consulting during the spring/summer. That tends to be how my industry cycles.

IMO, you want to have a broad service offering behind a veil of a major product. For example: Giving talks and conferences is my main product, fueled by a book/DVD set. Profit margins are highest there and scale well. However, this just doesn't work for certain segments of the population, so doing high-priced consulting to pay the light bills is always good - or my current strategy: Doing consulting for a discounted rate while taping the conference for later use in products.

Re: Underscore Price Dynamics

#53

Post by icelancer »

smsm42 wrote: post #50
crazygringo wrote: post #27

Is there anything in the app store TOS preventing developers from releasing, for example, free versions that are 14-day trials, that are upgraded to full version in-app, or else stop working? I have nothing against paying for apps, but after having been totally burned a bunch of times, I refuse to pay for an app I can't even try out first. Lots of people say "just look at the reviews", but they usually don't tell you…

IMHO this (disallowing trials) is a big mistake. I very rarely would buy an app that I can't try. Of course I can afford to lose $1 or whatever - it's not the cost but the fact that I had been scammed what would infuriate me. It would only make sense for the app makers to turn my loss aversion against me - if I already used the app for a couple of days and liked it, now the choice for me would be "lose it or pay meas…

I completely agree.

Apple contributed to the death of the up-front paid app by disallowing this. It's ridiculous.

Re: Underscore Price Dynamics

#54

Post by npalli »

cs702 wrote: post #46
spolsky wrote: post #15

The only business models I want to work on any more have some mass-market component that is absolutely free, and a niche companion product that makes money off of the exhaust fumes of the mass-market component. The last two businesses I started are Stack Overflow, which is free, where the careers business on the side makes money on the small fraction of Stack Overflow users who are looking to get better jobs, and Tre…

Insightful. On the other hand, many self-funded businesses are doing quite well charging for services targeted to non-mass markets -- for example, SmugMug (for professional photographers), FreshBooks (for invoicing & accounting), 37 Signals (for team productivity), etc. Some of these businesses are essentially one-person operations -- e.g., AppointmentReminder.org. I would include FogBugz in this list. "Make somethin…

Smugmug -- started 2002

Freshbooks -- started 2004

37Signals -- started 1999, basecamp in 2004

FogBugz -- started 2000

Point being, these are "old" business. If you are starting something today with all the hundreds of thousands of free apps and freemium based models, the same lessons would not apply.

Re: Underscore Price Dynamics

#55

Post by natural219 »

spolsky wrote: post #15

The only business models I want to work on any more have some mass-market component that is absolutely free, and a niche companion product that makes money off of the exhaust fumes of the mass-market component. The last two businesses I started are Stack Overflow, which is free, where the careers business on the side makes money on the small fraction of Stack Overflow users who are looking to get better jobs, and Tre…

I would go even further and say that this model is a special case of the more general advertising/marketing model of "Give Valuable Stuff Away For Free". As an example at a smaller scale, content marketing (in terms of blog posts, videos, pdfs, and other informational content [1]) is a great way for businesses to get eyeballs on their page and establish themselves as authority in a particular subject.

This even works on an individual level. I would say that contributing to open-source development on Github is a great way for individual developers to "Give Away Valuable Stuff" and in term become more visible and attractive to respected software businesses who may want to hire them (as full-time employees or freelancers).

[1] Brendan Dunn and Eric Davis have a great podcast about this which provides an excellent definition of content marketing: http://brennandunn.com/episode-006-the-sales-pipeline/

Re: Underscore Price Dynamics

#56

Post by ProblemFactory »

wahnfrieden wrote: post #28
ghshephard wrote: post #16

Earlier quoted context omitted.

It's not In-App purchases, per se that are evil - I've spent around a hundred dollars on new levels (great use of In-App purchase - you reward the developer for creating new content), new tools, new capabilities in the last few years (much less than the the close to a thousand dollars in "up-front" app purchases I've made) - and I think I've gotten real value each time. What's truly evil, is the cognitive manipulatio…

It would be more helpful to show examples where IAP/subscriptions were well executed by your standard and still made it to / stayed in the top grossing list.

ghshephard gave a good answer to the question "why do many people consider in-app purchases evil".

However, there is no doubt that "evil" approaches are more profitable than the doing the right thing.

Techniques such as the ones described in http://www.gamasutra.com/blogs/RaminShokrizade/20130626/1949... are very effective, and developers who do use them are likely to make more money. But that doesn't mean that any means necessary to make it into the top 10 grossing apps list must be considered ethical.

Re: Underscore Price Dynamics

#57

Post by angryasian »

mrtron wrote: post #23

Lately I have been thinking a lot about the giant leap of faith you have when installing an app. There is no free trial, and most apps you can't understand until you start using them. One of the biggest gaps is games - most promotional videos do not even display in-app activity. I think most of us would pay for instagram and twitter now. I would have to think twice about it above 20$/month. I don't think they could g…

I think its a little naive to think that users wouldn't jump to another network, if they started to charge. I think what mobile has proven is that the micro social networks are easy to start and can get big fast because of people reluctance to stick with a single solution.

Re: Underscore Price Dynamics

#58

Post by angryasian »

ruswick wrote: post #45
gdubs wrote: post #4

I think one of the main reasons it's so hard for new developers to make money is that -- as has been said so often -- discovery is broken on the App Store. The "new" category basically doesn't exist anymore, and even if it did there are a ton of new apps being released _daily_. For everyone's complaints about Apple's stringent review process, there's a ton of crapware on there, which makes customers really hesitant t…

I disagree. The issue is not exposure to customers, it is the mindset of customers. The market has matured as smartphones have become ubiquitous and free apps have come to dominate the market. Direct sales have simply faded because they are less lucrative at the highest level, and users have re-based their perceptions around that. Even if you could get your paid app to the top of the charts and attain maximum exposur…

While I agree, I think the bigger aspect of maturity is people understand their own usage. In the beginning it was cool to pay a dollar to try a new app. Now people have learned their lesson and understand the value these apps are quickly fleeting. They will open an app maybe 1 or 2 times and never find it useful again. This goes for games as well.

Re: Underscore Price Dynamics

#59

Post by ProblemFactory »

npalli wrote: post #54
cs702 wrote: post #46

Earlier quoted context omitted.

Insightful. On the other hand, many self-funded businesses are doing quite well charging for services targeted to non-mass markets -- for example, SmugMug (for professional photographers), FreshBooks (for invoicing & accounting), 37 Signals (for team productivity), etc. Some of these businesses are essentially one-person operations -- e.g., AppointmentReminder.org. I would include FogBugz in this list. "Make somethin…

Smugmug -- started 2002 Freshbooks -- started 2004 37Signals -- started 1999, basecamp in 2004 FogBugz -- started 2000 Point being, these are "old" business. If you are starting something today with all the hundreds of thousands of free apps and freemium based models, the same lessons would not apply.

All of these are also apps for businesses, not casual entertainment for consumers. Also, they are mainly delivered via web, not Apple or Google app stores, which makes it possible to offer a time-limited free trial with no free plan.

I'd hypothesise that both of these are more important factors than being started in 2003 vs 2013.

For a freelancer, $100/month is a good deal if it allows you to get a few more billable hours per month. For a larger established business, $500/month is pocket change that nobody will even notice (and the customer who signs up isn't even spending their own money).

Re: Underscore Price Dynamics

#60

Post by pbreit »

spolsky wrote: post #15

The only business models I want to work on any more have some mass-market component that is absolutely free, and a niche companion product that makes money off of the exhaust fumes of the mass-market component. The last two businesses I started are Stack Overflow, which is free, where the careers business on the side makes money on the small fraction of Stack Overflow users who are looking to get better jobs, and Tre…

Zero-marginal cost offerings practically require such a thing.
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