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