Without this, your product is doomed to fail

I'm just a curious user - How can a start-up be profitable if it charges only a one-off fee, and that too only something as low as $50-$60? I think it's a very risky business model.

In my opinion, it's a terrible trade off and you're probably going to bite more than you can chew. Let me explain. For example, let's consider two apps A and B.

A charges a $50 one-off fee and B charges a $20 recurring fee. Sure, A will grow exponentially and you will appear to be instantly profitable, but it's a risk.

Think of this - You take $50 from the customer only ONCE this means, for the next two years, you need to pay for his support from your pocket. More the customers, more the support needed and more you will end up burning your pocket.

The problem with exponential growth is that it becomes static after a while and this is when things will become ugly. It will be a difficult situation because you can't switch to charging your customers monthly, because you've already charged them once. You will have very few options left then.

I can't imagine supporting a million users through a support system that I'm paying off monthly, but from an income that isn't monthly.

I think the best way would be to charge the customer annually like $99/yr or something like that..

This is a good read:

http://justinmares.com/why-real-businesses-dont-charge-5mont...

Re: Without this, your product is doomed to fail

#7

Post by l-p » Wed, Apr 10, 2013, 9:18 AM UTC

duiker101 wrote: post #5

l-p wrote: post #3

I hope you fixed your security issues. ( http://redd.it/14o4ki )

I do not see the connection between this and OP. I am not saying you are wrong or else, I am just asking to point me to it because I can't see it.

The reddit post is mine and was about Sendy (without disclosing its name).

Re: Without this, your product is doomed to fail

#8

Post by siong1987 » Wed, Apr 10, 2013, 9:43 AM UTC

neya wrote: post #6

I'm just a curious user - How can a start-up be profitable if it charges only a one-off fee, and that too only something as low as $50-$60? I think it's a very risky business model. In my opinion, it's a terrible trade off and you're probably going to bite more than you can chew. Let me explain. For example, let's consider two apps A and B. A charges a $50 one-off fee and B charges a $20 recurring fee. Sure, A will g…

You don't have to worry about scaling it to hundreds of millions revenue a year if you are not running a startup.

In this case, it seems like the OP isn't running Sendy as a startup. He is working on Sendy as a lifestyle business which is making more than enough money for the OP and maybe more than some of us who are working on our own startups.

Re: Without this, your product is doomed to fail

#9

Post by lenazegher » Wed, Apr 10, 2013, 9:46 AM UTC

Late last year you mentioned RSS-to-email was on your roadmap. [1] Do you know when it will be implemented?

I've been looking for a dead-simple RSS-to-email subscription service for one of the sites I work for. The only offering I've found (and dislike) is from MailChimp.

[1] http://forum.sendy.co/discussion/40/rss-to-campaign-segments...

Re: Without this, your product is doomed to fail

#10

Post by ujal » Wed, Apr 10, 2013, 9:58 AM UTC

siong1987 wrote: post #8

neya wrote: post #6

I'm just a curious user - How can a start-up be profitable if it charges only a one-off fee, and that too only something as low as $50-$60? I think it's a very risky business model. In my opinion, it's a terrible trade off and you're probably going to bite more than you can chew. Let me explain. For example, let's consider two apps A and B. A charges a $50 one-off fee and B charges a $20 recurring fee. Sure, A will g…

You don't have to worry about scaling it to hundreds of millions revenue a year if you are not running a startup. In this case, it seems like the OP isn't running Sendy as a startup. He is working on Sendy as a lifestyle business which is making more than enough money for the OP and maybe more than some of us who are working on our own startups.

I disagree here. If growth is the main factor for a startup, charging one-off fees guarantees you not to be delusional about your growth. It is actually much easier to get stuck with the recurring fee model, where you reach ramen profitability but don't grow as fast or worth - not at all.

EDIT: Actually the same psychological effects that push entrepreneurs to charge a recurring fee, push the customers to prefer a one-off fee.