Should I charge for my service or not?


3

I have a product in beta (which is a minimum viable product) and am working on the release version.

I had my early adopters take a survey and although a majority of them had great things to say about the service, they do not want to pay for it. They suggest I use the ad revenue model and keep this service free.

This is disappointing especially since I was planning on having a subscription model without a free account (There have been several posts online about how freemium model will mostly result in a large amount of unpaid users)

Any thoughts on this?

Pricing Monetization

asked Dec 20 '10 at 06:44
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Nick H
120 points
  • Of course they say they would not want to pay for it. Who cares what they say about paying? Charge for the service. Better to find out now than to wait. I'd rather give my time to a soup kitchen than making software for other people for free. – Tim J 6 years ago
  • When I add my subscription, do you recommend I have a free plan too? – Nick H 6 years ago
  • I'd try to work on a subset of features that is free - or have a limited trial for free - to get them hooked on it. But totally free is silly - you can't make a living like that. – Tim J 6 years ago
  • Is there much that you plan on implementing above the minimal viable product? You need to think modules when implementing any extra features. Modules that can be turned on or off based on a users subscription level. Minimal viable product for free, anything else at all (including support) you need to charge for. Unless your product lends itself to embedding ads. I think that having something for free can be very powerful, think of it as a marketing hook. – Tinny 5 years ago
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7 Answers


6

The customer is always right, except when they aren't. If you ask a group of people eating in a restaurant, would you rather get this meal for free or would you rather pay for it? What do you think their answer will be?

If the majority of your customers have great things to say about your service, the odds are they would be willing to pay for it. Asking them about free vs pay is just silly.

answered Dec 20 '10 at 10:04
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Gary E
12,510 points
  • Although I agree with you, the main purpose of having a Minimum viable product is to get feedback from users if they are willing to pay for it or not. – Nick H 6 years ago
  • I don't know that I agree with that entirely, Nick. The purpose is to get feedback - not necessarily if they'll pay or not, but what they like and don't like. Whether or not they'd pay for the service is ancillary in my book - more a function of how much they liked/used the product. – Josh Sam Bob 6 years ago
  • **Never** trust a customer to tell you what your product is worth or how much they can pay for it. People lie, and they lie a lot about money. Just think of it from your own perspective. You are getting something you like for free. Then the person providing that product asks if you want to pay for it. Of course you don't want to pay for something you are getting right now for free! – Gary E 6 years ago
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3

Without knowing any details beyond your question, it's impossible to assess.

If you give away your service (and you don't want to run a charity/hobby), then there are three ways you can get paid: fees, advertising, or aquisition.

Building a service around advertising revenue is almost impossible, since you need quality traffic and a lot of it. The chance of getting aquiried by Google or someone else is pretty small, too.

Fees are reliable, scalable, and you can always upgcharge existing users with new services.

answered Dec 20 '10 at 07:06
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Alex Papadimoulis
5,891 points

2

Some questions should never be posed to your customer base. I am sure if you ask them if they are willing to pay for it, or get it for free, or get it for free with a monthly spa treatment and a new BMW, your customers will choose the last option.

You should only offer freemium for the following reasons:

  1. You are going to make a signifigant income from ad revenue
  2. You are boxed out of the charge market, and there are too many players in the feild that are offering a SUPERIOR product for free. Still this does not always apply, look at the number of visitor tracking apps that charge $$$ and compete with free tools such as google analytics.
  3. You are using Freemium as a marketing tactic, where you get great exposure for your users and thus attract more subscribers (know the difference between users and subscribers)
  4. You have in place where you can upgrade a user (free) to a subscriber.
  5. Your free plan is very limited.

Bottom line: If your service warrants value then charge for it.

answered Dec 20 '10 at 10:25
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Frank
2,079 points
  • Do you think I should avoid the free plan altogether and go with the 30 day free period? – Nick H 6 years ago
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2

If you don't charge for your software then all you are doing is devaluing your time. No doubt if you start charging then you will lose some customers, but they aren't paying anyway so there is no big hit for you there. The other thing to consider is support. If you don't charge and you offer support then you are taking a double hit - the time for writing the software and the time for supporting it.

You have to make a stand and stop giving your software away (because by not charging that is exactly what you are doing). I would also discourage you from letting your customers determine your business model and pricing strategy.

There are plenty of answers on this question and I'm sure you have a lot to think about. Best of luck with your decision.

answered Dec 20 '10 at 18:40
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Smart Company Software
1,190 points

0

Thank them for their input, but explain your need to earn a living just like everyone else. Sometimes early adopters are into the open source thing and have a mentality of never paying for software. Start developing for those who do buy software.

Ask the users that prefer free software if they wouldn't mind donating their time to help you find advertisers.

answered Dec 20 '10 at 12:20
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Jeff O
6,179 points

0

Running a service costs money, you absolutely must make enough money to keep the service running + pay yourself + have money to invest in growing the business + some profit.

Otherwise you don't have a business.

It's highly unlikely you can make that amount of money from ads.

Having a free time limited trial or a free feature limited plan are great marketing tactics, you should definitely have one (and maybe even both) of them.

But take into account that free users still use resources (both server resources and support time), often more than paying users and in most freemium services less than 1% of users - so you must either setup your plans so that the free plan is essentially useless to your target customer (for example: 2 user limit for a collaboration tool) or setup your pricing so that every paying customer covers more than 100 users worth of expenses.

answered Dec 20 '10 at 19:31
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Nir
1,569 points
  • One of the user who didn't want to pay pointed me to another service which is been given away for free currently. It appears (though i can't confirm) that this other service is making money off of advertising. I guess one free service can kill a lot of services that charge. – Nick H 6 years ago
  • @Nick H - You have to be better (or at least different) than your competitors, that's true when they're charging money and even more true when they're free. that doesn't change the fact that online ads are a poor source of income unless you have lots of targeted traffic (btw, I sell software that has lots of free alternatives - and people still pay) – Nir 6 years ago
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0

The definition of a customer is 'someone who pays for something'. Some prospects seem to give the impression we should be paying them to download and use our software (Others will take one look at it and send a $50K order the next day)

However, you need to figure out if your product does offer real value to people, and then build a message that conveys that. Try doing a features/advantages/benefits analysis of your product.

If it's worth doing then it's worth charging money. You need to eat, and reasonable customers know they have to invest in a product to keep you (and by extension, them)in business.

answered Dec 21 '10 at 03:49
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James
1,231 points

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