When to decide how to monetize your product?


1

I am not sure if I should wait till I have multitudes of users, or just start monetizing it now.

My first instinct would be just to allow it to be monetized by ads. I only need it to pay for itself really, but I have already built in a backend for paid subscriptions just so I could reuse the code for a future project so that is always an option. I have created a poll in the sign up process to figure out what most users thought about which option was better.

Strategy Monetization Saas Product Launch

asked Aug 22 '13 at 08:03
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Dkroy
130 points
Top digital marketing agency for SEO, content marketing, and PR: Demand Roll

4 Answers


4

I don't want to disappoint you but ideally you should think about the monetization BEFORE you launch the website.

In the case you start with free membership, going to paid membership for everybody will probably make leave some (if not lot) of your users.

So there remains the possibility of launching the freemium membership. But you will have to find the "+" that you will bring to the paying members in comparison to the free membership. The difficulty is that if it wasn't foreseen before you will have to find some new feature (good enough to ask money for) and if your web is already at "100% as expected", it may be difficult.

In that case, the simpliest could probably be the premium account without ads. This kind of freemium is quite usual but it requires members really willing to pay (as it is so simple to just use AdBlock or other ad blocking module in the internet browser).

answered Aug 22 '13 at 17:35
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Data Smarter
1,274 points

1

Please recognize that this question has many opinions, and no experts in the sense of sources of assured success. If Facebook struggles, and Google struggles, and Microsoft struggles, then nobody can be hired who knows the answers. (I get hired sometimes by big companies with pricing problems - but the expertise I have sorting out competitive pricing issues gives me a language and toolset, but few answers, for the startup case.)

So there are plenty of opinions to study: here are some of mine.

  • Do the math - Find out everything you can about how much an engaged user is worth, how much you can expect to make from ads based on community size, demographic and connection, and how volatile these answers are. That way, you can have targets and measure.
  • If in doubt, ask your users for money - Just because all the huge successes seem to give everything away, doesn't mean you have to. In web and smartphone apps, we're at a time when the most successful creators are either selling their capacity to work to brands who would like to fund and promote it, or selling their work to customers who would like to buy it. Asking for money guarantees learning. And it's easy to balance and rebalance your attention between clearly delineated groups of paying users, "free trial" users and "free tier" users.
  • If you already know ads are a necessary part of the story, incorporate ads from the get-go - you have to become proficient in balancing the need to make ads sufficiently visible to generate returns (directly through clicks, indirectly through prompted "go ad-free" upgrades), with users needing to experience the value you are creating without annoyance and distration. So start early when the mistakes cost you less.
  • Get real about how the value for users grows with uptake - It's never exponential, but there are common profiles. If there are going to be inflexion points where value changes (it might significantly grow per user, or it might significantly reduce per user while enabling larger total populations, for instance), understand that you may have to risk breaking your own model to push through and harvest that growth. So what's right for now isn't right forever.
  • Don't ask, experiment - Polls add noise and friction, but typically deliver very little insight. Make a change and measure the result, or split test and compare results.
answered Aug 25 '13 at 17:14
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Jeremy Parsons
5,197 points
  • This was a great answer, but I had to choose the answer with the most up-votes. Thanks for taking the time to write out a well thought out answer! – Dkroy 8 years ago

0

Many entrepreneurs make the mistake of waiting to think about monetization after products are built. Relying on advertising as a revenue stream only works if your traffic is through the roof....which is likely not the case for all but a handful of startups. Test monetization as soon as you can! It's not a business if you don't make money...it's a hobby.

answered Aug 23 '13 at 04:27
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Stella
11 points

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It will likely take a while to monetize your business, maybe more than one year after the time you think. So you should start sooner rather than later. You'll also want to get all the payment processing in place, figure out your model, tiers, etc. Some folks may suggest that you shouldn't change your pricing, but that doesn't sound smart to me, it's all part of the discovery process. Also as your project matures, you will likely see more expenses and that may provide more pressure to generate revenues.

answered Sep 24 '13 at 11:48
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Efficient Leader
37 points

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