

Ask HN: Thinking about changing business model - nicholasreed

I built a scheduling program for businesses in a niche market (~1000 potential customers) that now has 4 customers that each pay ~$300 per month. While current customers love the product (saves time/money, very simple to use, selling point to their monthly customers), attracting new clients has proven very difficult. For every prospect I have talked to, they say that price is the only obstacle. These customers are operating on a "very thin" budget and I am having tremendous difficulty convincing new clients to sign up.<p>So, I am looking into switching from a subscription model to an ad-supported one so more clients will sign up. I assume my per-customer revenue/profit would go down, but my increased customer base would overall make me more money. But, I have no idea how conversion rates work.<p>Does anyone have estimates on what the following data would be able to produce for monthly advertising income?<p>Monthly averages (total, not per customer):<p>72k pageviews<p>48k unique pageviews<p>9k visits<p>2k users<p>7.92 pages/visit<p>3 min average time on site
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david_shaw
Switching to ads is a very difficult way to sustain your current ~$1200/month,
much less grow it.

I created a bedtime calculator called <http://sleepyti.me> that usually brings
in about 10k hits per day. At that rate, I earn between $10 and $20 per day,
or $300-$600 per month. Although I consider that revenue to be an astounding
success, it is less than half of what you're making right now through the few
customers you have.

I agree with cabinguy that a free trial system seems to be your best bet.
Don't pull a bait-and-switch with the prices, but offering a 1 month trial
that shows how easy and efficient your app is seems like a great way to hook
potential customers. Maybe your price point _is_ a little high, and you could
be willing to let customers wrestle it down to, say, $200/month. Pricing is
difficult, and especially without knowing your niche it's a little hard to
say, but the rule of thumb is that if people say it's too expensive, it
probably is.

Alternatively, you could meet somewhere halfway and offer a six month "special
price" at $100/month or something to see if you can hook people in that way.
Either way, I wish you the best of luck!

------
cabinguy
If you are selling ads directly (just as hard, if not harder than selling your
product) - it will depend. You would have to get huge CPM's with your traffic
for it to make sense.

If you are going to use an ad network (adsense, etc.) you will make almost
nothing. Way, way, way less than the $1,200 you are currently bringing in.

Here is what I would recommend: Offer your potential clients a free trial.
Let's say 30-90 days. If your product is valuable to them, you will be able to
convert them to paying customers. (Like your neighborhood crack dealer. Give
it away for free, get them addicted and see who comes back for more! Its a
proven strategy.) The key is to get them using your product.

Also, there is no rule stating that you cannot show display ads/text ads AND
charge for your product. The only people who complain about ads are
hipster/early adopters. If your customers are not redditor types, you can most
likely have your cake and eat it, too.

~~~
nicholasreed
My market is private tennis clubs.

I am currently offering a free, no obligation 1 month trial with no long-term
contract. Each customer has their own domain name and I customize each site to
match their existing website's look and feel.

I show them testimonials from current customers, examples of how much time can
be saved by moving from old systems (usually paper or an Excel spreadsheet) as
well as dollar translations from time saved.

Once a customer signs up for the trial and begins using my system, they have
already made the decision to keep it for years. The hardest part is having
them make the jump, and the price keeps on showing up as the only obstacle.
I've tried determining if it is a "fake no" and they have other reasons, but
so far that honestly seems to be the only reason.

When you say way, way less, what would you expect for CPM? From reading
around, a highly targeted audience (in my case, I know exactly what sort of
income bracket, age, etc.) would have higher CPMs, up to $35. If I saw $5 CPMs
I would be around $350, so I would need 3.5x the number of customers. I just
don't know if $5 is even a number I would be close to reaching with my
audience.

$50 a month should be a non-issue for my customers, even non-profit, member-
owned ones.

~~~
rudasn
have you considered offering a "pay as you go" package based on the clubs
membership count? they pay a flat fee of X a month (or X-5% a year) and Y per
member per month. This only makes sense if your program has something to do
with the club's members (booking courts, managing renewals/subscriptions etc).

btw, what sucks the most in tennis clubs is finding a court to play. it would
be very cool to send a text and say "15:00 today" and receive back a text
saying "Ok, booked" or "16:00 is better" or something like that; or "next free
slot" and receive back "16:00, court 5. Book?".

~~~
nicholasreed
It does that and a lot more.

We do base our pricing off a few club-size factors, with ~$300 per club being
the low end. If they wanted to pass the price off to members, they would see
rates rise $0.50 per person per month.

