FeedLounge Investment

I continue to get responses trickling in from last week’s FeedLounge newsletter mailing. Many of these responses include answers to our “what is a fair price for FeedLounge” question. All of the feedback is very valuable information for us to have – even the few people that responded with:

I’d never pay for any online service, all online services should be free.

I guess I just don’t understand that line of thinking.

As someone who has one online service running already and is working hard to get another launched, I have trouble relating to this sentiment. Perhaps it is because I understand the amount of work and expense involved.

As I alluded to in this comment on the FeedLounge blog, Scott and I have personally put in a good deal of money into FeedLounge hardware and support over the last month or so.

We’re starting somewhat small on the hardware side, planning to ramp up as we bring on more users and have income from the service. For our initial beta launch (~10,000 users), we will have about $9-10K in hardware plus ~$1300/month in co-location costs (rack space and bandwidth). Over a 1 year period, that is ~$25,500 in straight expenses1 and we’ll just be going up from there.

We haven’t finalized pricing yet, but assuming we use the $5/month2 price a lot of people said they would be comfortable with3, we need to have ~500 paying customers, just to cover the server and bandwidth costs4.

Of course, if we want to be able to run the service and continue developing the software, we need to do more than just cover our hard costs; we also need to cover our development costs and make enough profit that we can afford to run the service rather than work on something else.

Do I think FeedLounge will be a successful and viable service – one that is good enough that people will be willing to pay to use it and support it? Yes I do. I’m investing my time, money from my savings and turning down other paying work to help make it succeed.

When I hear someone say “a service like this should be free”, it feels a little like they are saying “your time and investment are worth nothing”. I know it’s not personal, but to make a really great product, you have to invest yourself personally. When you do that, you take things a little more to heart because of it.

Back to work… :)

  1. Assuming nothing goes majorly wrong in an expensive way. [back]
  2. We get $4.56 from a $5 payment if we use PayPal. [back]
  3. Assuming there are compelling paid features. [back]
  4. We may make some money from advertising in the free version, but we don’t really have numbers on that yet. [back]

This post is part of the project: FeedLounge. View the project timeline for more context on this post.