

Customers won't give you money unless you ask - toast76
http://blog.downie.com.au/customers-wont-give-you-money-unless-you-ask

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ishansharma
This is some good advice. I would also love to see start ups asking for my
money.

When there's a free plan, my usual activity goes like: \- Register \- Test \-
Forget

But when I'm paying, it's much different. Not to say that all services
shouldn't offer anything free. But at least in my case, charging is doing both
of us good. And it also ensures that company will have some sort of revenue to
live on and not die as a freemium company!

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daniel-cussen
Especially if the freemium startup becomes an acquihire.

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quackerhacker
Free is always the spirit of the internet, but when starting a startup...I was
told to spend as much time on my business plan (revenue), as I would coding.

When any website or app begins charging, or throwing ads out, there's always
an outcry from the users that weren't use to it. Sure being free will probably
make any startup grow faster, but to make your users happy...charge, have ads,
or AT THE LEAST tell them that you plan to charge later, or aim for
acquisition like Instagram :)

~~~
orangethirty
You should spend 90% focusing on profits, and 10% coding.

~~~
quackerhacker
I think MySpace did that and if your goal is to build an audience on the basis
of free99 then throw ads at them, you leave room to get taken over in your
niche.

The view you present shows no pride in ownership, quantity over quality, and
it still works though. As Seen On TV products are an example...sell cheap
stuff so low, that it's not worth returning. Cereal and Chips and the
packaging model is another successful example.

However, I still say, just like coding, there is an art in a business model,
and the more dedication any entrepreneur spends on their implementation will
determine their success.

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orangethirty
_The view you present shows no pride in ownership, quantity over quality, and
it still works though._

I wonder how you got that from my comment? All I said is that _in a business_
, the focus is on profiting. Code takes a back seat, because perfect code ever
made anyone money. Though I'm not saying to develop a shitty code base. But in
reality, the software is merely the product, and not the business. I take a
lot of pride in my work, and do not ship/sell products built on top of bad
code. But I do know that the focus is on the business side. That's why I'm
able to successfully bootstrap while others fail with millions of funding. (:

Myspace failed because it did not adapt to the market. They got lazy.

~~~
quackerhacker
What I got out of your comment was monetize at every possibility (maybe I
misconstrued it).

>in a business, the focus is on profiting

This is what I agree with you. Websites/Apps are usually projects before they
are cultivated into a businesses. Maybe it's semantics, but I think "profits,"
conveys the wrong message in your vague comment earlier.

If any developer wants to monetize their product (their code), I think what
you're trying to convey (based on your response) is that much thought needs to
go into the efficiency and risk/reward ratio. How much will your distribution
cost? How efficient is Nginx vs Apache?

Basically, business practices will result in less cost (risk) for the project
that turns into a business. Efficiency of the business model will result in
the lowest costs for the project/business, to the point where profit is
feasible.

~~~
orangethirty
What I got out of your comment was monetize at every possibility (maybe I
misconstrued it).

No, that's not what I meant. Monetizing and profits are two different things.

~~~
quackerhacker
Yeah, I figured it was on me when you actually started talking about business.
I thought you were trying troll and say it's all about money and greed :)

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orangethirty
Once you get to know me, you realise that I don't think its about money and
greed. To me money is merely but a tool. Greed is the worse drug that has ever
existed. I'm more about creating new things and jobs. To give back to society,
rather than take from it. Sure, I will make money off of it, and will have a
good lifestyle. But I make sure that others do so as well. All the money in
the world doesn't mean a thing if you have to live inside a castle.

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morgante
I think I'm confused on what the term freemium means. I always thought it
meant a product with both a free and paid tiers.

This doesn't seem to match with "For example, Freemium works really well when
your user IS the product." Such services, like the Facebook example he cites,
are free, not freemium. Right?

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lucian1900
I think there's facebook credits or something like that.

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steveridout
How about the google apps route as an alternative to freemium?

1\. Give it away for free for a long period to build a user base, get feedback
and iterate.

2\. After a while, switch to paid only for all new users. The old users
continue for free so no-one has a right to get annoyed.

Seems a pretty good option to me.

~~~
orangethirty
Its a great option, _if you have millions and millions of dollars in the
bank._

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jakejake
It does feel like a startup strategy is that if you can just manage to get a
large amount of free users - then you'll be able to figure out how to monetize
it later.

We all know that it works in exceptional cases. But many times when I see it,
it reminds me of an old Saturday night live skit about "the change store" that
provides change for any amount of money without taking a fee. When somebody
inquires how they make they're money the owner replies "volume!"

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epa
While a good article, i disagree with his statement that by providing a free
service, you are implying it does not have any value. I think the free service
model is much more deeper than this comment suggests.

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inopinatus
It is a very common result in cognitive decision-making studies that people
don't value what they don't pay for. Whether or not you think the issue is
more complex, the fact of it is very well established: in general, absent
other measures of utility, price signals are used by purchasers in their
initial valuation of a commodity. It's a limit example of the anchoring bias,
a cognitive effect to which most humans are ridiculously susceptible.

There is a flow-on effect in the way consumers interact with a service
provider, too: per account, you'll receive more complaints from free users
than paying ones; vice-versa, more constructive suggestions from paying users
than non-paying users. This result is explained as a choice-supportive
response [look it up; "the tendency to retroactively ascribe more positive
attributes to a choice invested into"], since the opposite behaviour would be
a source of cognitive dissonance. It can be a source of frustration to paying
users that their suggestions/requests are not then more highly valued by the
service provider.

~~~
quackerhacker
>>you'll receive more complaints from free users than paying ones; vice-versa,
more constructive suggestions from paying users than non-paying users

This is SOOOOOO true! It's because monetary value comes with commitment!

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androidb
You can think of this article as a single case study, nothing really enough to
build a theory. Freemium works statistically better than paid, as you can see
presented at the recent Google I/O 2013:
<http://www.youtube.com/watch?v=yQ3wgPP7PWY>

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ezraroi
Good article, i will take it into consideration in the start up that i am
currently working on. Only one thing that i don't agree, giving something for
free dose not always implies it has no value.

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namenotrequired
Just curious, can you name any counter examples?

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Tr4pSt3R
What if the demographic an app serves or aimed at is known to be notoriously
cash-strapped i.e. university students ?

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gingerlime
I think the notion of the "notoriously cash-strapped students" is a bit of a
myth. Not that students typically have wads of cash, but most students I see
around have iPhones, trendy clothes, spend money on booze and cigarettes. And
even if you avoid generalizing students as trendy and cool, look at study aids
students buy, they won't necessarily spare on a book or a laptop that would
help them study.

At kenHub - we build a platform for learning anatomy. It makes students' lives
easier and they can be more effective in their studies. As much as we'd like
to give it away for free to all students, we need to make a living, and we
need money to improve our products. Luckily, our audience seems to see the
value and are willing to pay for it.

I think it boils down to the utility of your product, to students,
grandmothers, or any other segment.

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Gepsens
Actual value vs Perceived value, a key question that many forget and that
could solve many monetization problems.

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fakeer
Sometimes when the service is not ready for immediate consumption, devs are
bound to release it as a freemium or just free - if they have to release for
some reason.

There are so many web services are coming out everyday, people cannot just
find it very suitable for them and cannot find whether it's good enough.

Trial period is good but it is not as good as freemium.

