Building Viable Services

Stephen O’Grady wrote an excellent piece a few days back where he talks about paying for online services. I had lunch with Steve a couple weeks back and we touched briefly on this topic. I’m having lunch with him again this week (it’s nice to hook up with a fellow techie here in Denver) and look forward to going more in depth on the subject with him.

This is an area I’ve been thinking about quite a bit lately as we prepare to do a wider launch of FeedLounge. In the next week. Scott and I will be spending thousands of dollars1 to set up the infrastructure necessary for our beta release of FeedLounge. This takes a bit of a leap of faith that people will indeed pay to use a service like FeedLounge. We’ve crunched the numbers and we think it will work, but it’s still the largest financial risk I’ve taken as a self-employed developer.

A few people I’ve talked with have hit me with an “all-commercial” perspective for FeedLounge – questioning why we’d offer any free version. For example: the Use Tasks service doesn’t offer a free service and it’s been growing steadily since we launched it about a year ago. We just upgraded the hardware to accomodate the growing number of users, but since we don’t have free users (and offered the lifetime accounts to offset the initial hardware costs) the service has been paying for itself since the first month.

There is definitely a business argument to be made for the “all-commercial” approach since each user represents real monetary cost to us. FeedLounge is a little different than other services because in many cases a dormant user has no real overheard. With an aggregator that polls feeds, a dormant user still has an impact. Many of the paid vs. free decisions on features center around this. I’ll go more in depth on this in a future post – it’s are interesting area.

There is a possibility of getting some revenue from ads from free users and there is value in having market share as well as it helps spread the word to potential customers. Also, we simply want to bring a great feed reading experience to as many people as possible. :)

Hopefully a number of users will decide the paid features are worth a couple of bucks a month and we’ll be in good shape.

  1. Probably part from our savings, maybe part from a small business loan or leasing one or two of the servers – recommendations on this? [back]

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