When I was an SAT tutor I started charging $20/hour. I was inexperienced and a bit younger than most of my clients, so I figured I couldn't charge much. After awhile, I decided I wanted a higher wage if I got new clients. But, how much? I decided to ask for $30 from new clients. No one argued, or showed any displeasure. Wow! But, had I not gone high enough?
The next time I decided I wanted more, I made the decision to jump it to $60/hour just to see if anyone would take it. And... everyone did. Without question.
In order to get paid you have to ask. And, it's sometimes shocking how much people will pay you. Don't be afraid to ask for more.
It also changes the way you plan and prioritize your development objectives -- you begin approaching your project as a real business instead of just a website. When you are ready to begin your next project, you now have a wealth of business experience to bring to the table along with any development/domain knowledge.
Then I started reading it one day, and it actually has a ton of really fantastic business and sales ideas that are not evil at all. The thesis of the book is that for your business to succeed, you need to project an image of success and confidence. The book goes through dozens of specific ways to do this, and asking for more money is one of those. Others include specific ideas on how to present and package the company.
The author discusses the issue of pricing and payment extensively. I highly recommend this book for anyone contemplating issues of pricing their products and interacting with customers. It's honestly not as evil as it sounds. And even if the very idea sounds terrible, consider the book anyway. As Aristotle said, "It is the mark of an educated mind to be able to entertain a thought without accepting it."
Ads are an extremely unreliable business model. If you want to be an entrepreneur, run a business. If you want to run a business, sell stuff. Don't fall into the trap of "oh, I'll just tack some ads on later and we'll be fine."
In other words, you need more traffic than most people can fathom.
PPC (even banner) advertising is like scrounging for scraps at the table of someone successful.
AND, of course, if the ads work -- if the advertisers get their money worth -- then of course the ads are leading your users away from your app, which means of course a lower rate of returns.
Ad-supported biz models are difficult to achieve, fickle, counter-productive and, frankly, more work than charging people.
I don't understand this statement, specifically the reference to AllTop. Can someone offer me some insight?
They're saying: BS. Start a business. Think about a business model. Charge users.
(AllTop is an RSS aggregator for a variety of interest areas like Museums, Cigars, and BBQ. There is absolutely no revenue model except for publishing advertisements. Guy, being Net-famous, was able to sell it after about a year's work. Your mileage will definitely vary from that.)
I am not saying they are wrong, I would just put a little more confidence behind Guy's statement.
This part caught my eye, though: "we were honest with them. We let them know that implementing that would mean addition cost for us , but would still do it if they were ready to pay a subscription fee".
That's a common early feeling, and one that I've had as well. But you need to completely and forever abandon cost-based pricing if you're going to thrive (find your best customers) as a subscription web app. The task of figuring out what your web app is really WORTH to your customers rather than what it costs you to operate is the key to high profitability and happy customers co-existing.
The worth/value of your app is a percentage of the surplus of success it creates for its users, where success is defined by the user.
Sometimes it's right to charge for something that took you 1 minute to write, and sometimes it's right to give away a feature that took weeks of development. It all comes down to what makes the most sense for your business.
New methods and skills always come out of trying to solve new problems. And hopefully that will lead you to pursue something even harder/more interesting.
Edit: typo.
