

Ask HN: If 37signals apps were free... - fjabre

Ok so in the next few months I'll be releasing a web app similar in functionality to several of the 37signals apps and I've had quite a hard time deciding on the exact revenue model/pricing structure to aim for.<p>Lately I've seen quite a lot of discussion on HN and even from 37signals themselves about whether or not you should aim to get mega-eyeballs, aka Facebook, or whether you should grow more organically by signing up paying customers - building a smaller but more immediate cash flow over time, aka 37signals.<p>I'd like to imagine a scenario in which Basecamp and several of the other 37signals apps were free. In this hypothetical they might also have a freemium deal where they have a ridiculously cheap pro version like Google Apps for business - $50/user/year.<p>Currently, it's safe to assume with their current model they are steadily growing market share and are making several $million in annual revenue. I wonder, however, where they'd be today if they had a purely free, ad supported system in place of their current monthly fee plans. This also assumes they had other means of funding themselves whether raising more money through angels/VCs or they depended more heavily on their consulting business.<p>Anyway, I pose this question to HN. I'm not really sure how to answer it. My only doubts about a free model for them would be that possibly businesses expect to pay for services much more than individuals do so perhaps they wouldn't be perceived as high quality as they are now.. but then again if they had millions more users than they do now with a targeted ad system in place perhaps they'd be that much better off.<p>?
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maxwin
If copycat apps could succeed, there would be millions of Twitter and facebook
clones since it is not that hard to duplicate their technology.

What make 37 signals successful are not just their app, but their brilliant
marketing skills,well known blogs and fantastic designs. These set of skills
are not that easy to copy.

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growt
Apps like Twitter and Facebook need a critical mass of users to function ("all
my friends are there"). But online project management works if you use it just
for your team. So don't think your examples match this situation. You're right
with the marketing of course, but that could work as well for other markets.

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ssharp
This is exactly right. And given the somewhat simple nature of a product like
Basecamp, I'm surprised that no cheaper, legitimate alternative has really
popped up and/or gained traction.

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sfall
free vs paid is not the question i would be asking. I would be asking why? why
use your service over another. Is it tailored for an industry? specific
feature set?

Or are you just jumping on the trolley?

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fjabre
Why use my service..?

Well it's more targeted to users of google apps with specific integration for
that market.

It will also be quite different from the look and feel of 37signals apps. They
have a nice feature set for sure but there is definitely some gaps in
functionality in several of their apps which I think others could address...

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sfall
if it were my product I would make it for a specific industry with features
that match that industries need.

\- music venues - promotional tools, scheduling, checklist, subcontractor
communication, etc

\- restaurants - recipes, scheduling, new hire forms, inventory etc

these are just off the top of my head

look at a smaller group but you could justify a higher price..

ps there is software for larger restaurants that cost 100k that is good but
the cheap stuff stinks, additionally construction online accounting software
is led by a company from deerfield il (suburb of Chicago) the name escapes me
right now

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Travis
Lots of businesses prefer to pay a small fee. It puts a(n implicit) contract
in play. I pay you money, you operate this for me. Free apps are scary from
the POV that they could either disappear, or are insecure.

Something about a company being willing to charge makes them appear more legit
to other companies. Argue it all you want, it's definitely the truth to a
certain market segment. And 37 Signals is positioned to dominate that market
(although not as much as MS).

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fjabre
Thanks for this Travis. That's pretty much what I was looking for. I would
tend to agree with this line of reasoning.

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Travis
NP. Really, this is where you hopefully have the rest of your business figured
out. If you want to target corporate IT, free probably won't work. But you
could do a freemium, or an ad-supported site (prob. not a good idea; people
won't like seeing ads show up on "their" documents...)

If you've done your customer discovery, validation, and profiling correctly,
you should be able to answer this question by stepping through the use cases
of each of your example users. If you haven't done that stuff, I highly
recommend running to Amazon.com and picking up Steve Blank's "4 steps to the
epiphany" book. It'll help, a TON, with figuring out exactly what your company
and product is.

