Start Charging Users When They are Successful

How do you monetize a web application or a web site? What kind of business model makes long term success more likely? These topics are being discussed to death on many web business discussion boards. There are mainly two camps of thought: Cripple the product or provide 30-day trial period then disable it unless user buys it. I call them crippleware and trialware. I don’t like any of these approaches. I believe the best strategy is to only charge users when they are successful.

user_success_models
Like every successful relationship, business and customers need to meet in a middle ground. Both sides must be happy. If one side thinks they are being screwed, they will not like it and will probably leave at the first opportunity. Crippled products or trial versions are bad because one side on the relationship knows that the other side is only in it for the money and does not care about them. You can use these approaches successfully and probably can make more money in the short term, but you will also limit growth of the product.

If you limit the users too early, they will have to stop using the service before they reach to a critical point where they can completely learn and utilize your service. What do you think?

9 Responses to “Start Charging Users When They are Successful”

  1. ralph says:

    I don’t like none of your double negatives.

  2. Aytekin says:

    Hi Ralph, do you have any suggestions?

  3. Aytekin says:

    Oh, I see what you mean. You were commenting on the language. Changed “I don’t like none of these approaches.” to “I don’t like any of these approaches.” Thanks. I should probably review my posts better.

  4. jrome says:

    I like the way you stated a very key point to selling premium or freemium digital products: “Crippled products or trial versions are bad because one side on the relationship knows that the other side is only in it for the money and does not care about them.” I’ve started many “trial versions” where I was in constant fear lest I forget to remind myself to turn off the auto-billing before the trial is up. That method works extremely well, as you write, for short term gains, but people are not going to renew or recommend a product that they paid for but don’t use. It’s those social recommendations that now market software to the masses, not million dollar ad campaigns. And once software is broadly adopted, usage should be the true measure of success. A symbiotic approach to sales, that is building in sales cycles based on increasing the value of the software to the active user base, is in my mind, how best to make a dime in these times and likely for the foreseeable future.

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  6. Aytekin says:

    jrome: I couldn’t have said it better:

    “A symbiotic approach to sales, that is building in sales cycles based on increasing the value of the software to the active user base, is in my mind, how best to make a dime in these times and likely for the foreseeable future.”

    There are two important goals every web startup should have:
    1. Increasing the user base
    2. Increasing the value of the software for users

    So, why not try to increase these two factors instead of trying to get as much as possible from a small user base. That’s premature optimization.

    This reminded me of a great Paul Graham quote. In fact, I found it:
    “You can envision the wealth created by a startup as a rectangle, where one side is the number of users and the other is how much you improve their lives. The second dimension is the one you have most control over. And indeed, the growth in the first will be driven by how well you do in the second.”

  7. Leon says:

    I totally agree with you this!

    People should concentrate on improving the value as possible in their products/services….and build the user number…get a lot of feedback….Only later think about how to monetize…

  8. Hanley Leung says:

    we used jotform for an online job application system and it showed immediate benefit after the first day. we upgraded to a paid service within 3 days of going live with our form because it was making our jobs so much easier and allowing us to collect the exact data we needed.

  9. Bima says:

    Exactly!

    I may be a late comer to JotForm, being a fresh start-up since August, but already I can see the tremendous value their bring to the customers. Based on what I’ve seen so far on the free services and features, JotForm is truly focusing on value development instead of mere number crunch.

    I have no doubt in my mind and would be more than willingly oblige to step-up to paid service once my venture grows. I want to be a part of something that also helps me to mature.

    Count on it!

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