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You Can’t Make Money Charging $1 Per Month

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

#31

Post by eggbrain »

revorad wrote: post #25
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.

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 resume/maybe a few paying customers that end up actually using it/etc)

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

#32

Post by MicahWedemeyer »

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." ?

We use an auto-ticketing system that has that feature. They say, "halp i can't log in!! ur site is broke!!!" and see a page that says:

"Do any of these articles answer your question? If not, click the 'Submit my ticket' button below." One of the articles is titled "Can't log in? Try these steps..."

I assume that's catching some of them, but plenty still click the submit button. You will always have some people who navigate through every automated trap you set up. You can choose to ignore if you want, but your customer service reputation will suffer.

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

#33

Post by eggbrain »

MicahWedemeyer wrote: post #22
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.

Since I made no mention of product, nor never specifically said only a single weekend, I would find it hard to believe that you could know what was doubtful to create or not, but I digress.

I think for everyone, there is a level at which they will not pay for something relative to what it actually does and how much they need it. For my example, it was something fairly trivial but still useful, probably the lowest MVP I've seen in quite some time. Even if I couldn't immediately make useable money with it, I feel that a low price point would be a great way to take a piece of the market that it was in, although I will fully admit marketing would have it's place as well.

I guess the better worded question would have been "Given all factors equal, what percent of the market would be swayed by a lower cost point?"

And the second question I would ask would have been "Even though you will not make money at $1/month, are there not services that are not worth $5-$7 dollars a month, but are worth more than free?" or even "Couldn't there be money in making cheap apps that together don't make much money, but combined add up to good income?"

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

#34

Post by kelnos »

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…

Have you considered that your login UI (including the "forgot password" feature) isn't intuitive enough for your audience? We take a lot of things for granted as programmers/techies.

Beyond that, I think I'd start "firing" customers who are a huge support drain like that, especially those who are non-paying customers. Unless your site depends heavily on network effects, and a large percentage of visitors have password issues, it sounds like your time could be much better spent elsewhere.

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

#35

Post by chadgeidel »

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…

Perhaps this is naive (and you may be doing it already), but do you provide different "QoS" for your paid/free users? Have 2 addresses/contact forms with specific promised return times?

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

#36

Post by MicahWedemeyer »

eggbrain wrote: post #33
MicahWedemeyer wrote: post #22

Earlier quoted context omitted.

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.

Since I made no mention of product, nor never specifically said only a single weekend, I would find it hard to believe that you could know what was doubtful to create or not, but I digress. I think for everyone, there is a level at which they will not pay for something relative to what it actually does and how much they need it. For my example, it was something fairly trivial but still useful, probably the lowest MVP…

We have a lower cost competitor, and I've never seen that factor into anyone's decision to go one way or the other. Well, maybe once or twice, but it's not a huge differentiator to most people.

By far, our biggest "competitor" is lack of knowledge. People don't know about us or our competitor. We're not trying to steal customers from each other. Instead, we just need to educate people that we exist at all. That's been my experience in most of these cases, especially for smaller apps that do one little thing. A huge amount of our effort in the beginning (and still to this day) involves letting people know we exist. Trust me, that takes a lot more work than just a weekend.

As for the "doubtful in a weekend" comment, I just find it highly doubtful that anyone can build a useful app that includes billing in a weekend. Payment systems are a real bitch. Plus, it's easy to gloss over the fact that "built in a weekend" usually means MVP, or even sub-MVP. From that point you have to keep building, market, promote and make sales. It's not like you just build it, flip the switch, and sit back collecting checks. It just doesn't work that way.

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

#37

Post by MicahWedemeyer »

chadgeidel wrote: post #35
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…

Perhaps this is naive (and you may be doing it already), but do you provide different "QoS" for your paid/free users? Have 2 addresses/contact forms with specific promised return times?

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

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

#38

Post by MicahWedemeyer »

kelnos wrote: post #34
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…

Have you considered that your login UI (including the "forgot password" feature) isn't intuitive enough for your audience? We take a lot of things for granted as programmers/techies. Beyond that, I think I'd start "firing" customers who are a huge support drain like that, especially those who are non-paying customers. Unless your site depends heavily on network effects, and a large percentage of visitors have passwor…

Easy to say, tough to do. I feel personally beholden to all our users, and I want to make sure they can use the site effectively. To that end, I try to help as best I can. It's a drain, but I feel guilty just ignoring someone who is begging for help.

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

#39

Post by chadgeidel »

MicahWedemeyer wrote: post #37
chadgeidel wrote: post #35

Earlier quoted context omitted.

Perhaps this is naive (and you may be doing it already), but do you provide different "QoS" for your paid/free users? Have 2 addresses/contact forms with specific promised return times?

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.

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

#40

Post by xuhu »

dpcan wrote: post #3

You don't really make $2K per month with just 2K customers at $1 per month. You have credit card fees - 2.9% + $0.30 (fair?) So that's $0.67 or 2985 customers (round up to 3000) And IF you ever reach a substantial income, you could be in about the 25% tax bracket. Now you take another .17 off of that, and you're down to $0.50 per customer. You need 4000 customers per month to earn around $2000 per month at $1 per mon…

At $1 per month, support is through a forum, community driven at best.
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