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… 🙂
- Assuming nothing goes majorly wrong in an expensive way. [back]
- We get $4.56 from a $5 payment if we use PayPal. [back]
- Assuming there are compelling paid features. [back]
- We may make some money from advertising in the free version, but we don’t really have numbers on that yet. [back]
This post is part of the project: FeedLounge. View the project timeline for more context on this post.
Yes, but if there are going to be similar if not BETTER services for free, why should someone pay for this service, whether you spent time on it or not? Just because you spent the money and time doesn’t make me want to pay for it…
Just some thoughts:
Simple economics: you can charge what the market will bear, and if this is less than your costs, then your business model needs a rethink — lower costs, raise prices and/or raise volumes (or appeal to the US govt, if you’re the RIAA).
I have a passing acquaintance with Tasks and Tasks Pro and if those are anything to go by, feedlounge will be fantastic: highly functional, easy to use and with a clear eye for detail which makes the tool a pleasure to use – but do I want to put down 5$ EVERY MONTH to use it?
Your main competition is likely to be an offline RSS reader though, and those are priced around 30$, which is only 6 months subscription on feedlounge and you don’t get a feeling of “owning” something as you do when you buy a software licence (however illusionary that feeling may be, but I slap down my 30 bucks and I never have to pay for the software again).
Just my 2 bits, and I tend to be (slightly) anti-subscription as I see this endless cash outgo ahead of me in my mind’s eye…..
I wish you all the best with feedlounge, quality work should get a quality reward.
I agree with the comparison with a desktop reader, however the desktop reader stores data on your hard drive and uses your bandwidth so the expenses are just not there that would drive the cost up. What a desktop reader can’t offer that a web based reader can is access from multiple machines.
I completely agree that if the service can’t sustain itself we’ll need to rethink the model. I believe it can sustain itself, I’m just trying to share what is going on behind the curtain. 🙂
UPDATE: One more note – if you pay $5/month and use the service 4 times a day, that comes out to ~$.04 per usage. For some, this will be worth it – others (IMO, more casual users) will not have that level of usage and won’t see value in the paid version. Both views are right.
Ray: Alex’s point is that they’re hoping to make a better service than what’s already out there for free. Is everyone going to think that way? Of course not. But some people are going to pay for it. I’m on the record as saying that I will, and the reason is that infrastructure does cost money.
Consider, for a moment, Flickr and ImageShack. They’re both in roughly the same space—free Web hosting of photos—but Flickr is so much better than ImageShack that many folks supported it early on in its life. [It was successful to the point that Yahoo! even bought ’em out, y’know?]
The end result of all of this is that Alex and Scott want to fill a niche: a shared services system for consuming syndication feeds. The end value isn’t going to come from just a good user experience, although that alone is worth paying for. It’s going to come from having a good user experience, not ever having to worry much about your feed reader or maintain it—which I’ve had to do in the past—and in the community knowledge base that FL hopes to build.
I understand that some people look at it as a pure dollars-and-cents proposition, and I can respect that, honestly. But in making dollars-and-cents your highest-priority “feature”, you will sacrifice other features along the way. For me, I don’t want to sacrifice that.
To be honest, I really don’t see how people can make such a deal about a potential $5 monthly investment. So much seems to be taken for granted on the internet…
I’m by no means ‘loose’ with my money, but I wouldn’t think twice about signing up, assuming the service was remotely useful & could replace my current reader.
SERIOUSLY people.. $5! You’re hard pressed to even find a LUNCH that cheap nowadays. (And you only need to pay THIS fee once a month!)
Have you taken a look at the flickr model were free users get a limited service while paying costomers get more features?
I’ll be glad to pay a montly fee for FeedLounge. I’m testing the alpha right now and althought I haven’t touched a lot of the featues yet, I’ve liked what I see. I can’t wait to see what the future holds for FL!
Don’t listen to the doubters – FL has a ton of potential and if you stay focused and positive it will be a big success!
Paying for content online
A friend of mine, Alex King and I recently had lunch. We got into a discussion about paying for online services. He recently started a new online service called Feed Lounge
ConÃ¡nn: It’s exactly what FL will be doing. That’s why I referenced Flickr in my comment above.
Agree with you Alex.
I’ve had some issues with Newgator, and if FL can take them away, then Â£3 p/m is not a bad deal, as well as being able to use on any machine anywhere.
Keep at it!!
Shrug, I’m a fan of the “keep the web free” movement, I guess.
Feeds are the Future
Time is valuable. Syndication feeds save time.
I used to have a large links page that I would go through and click on each for updates about 3-5x each day. This process took me between 10 minutes and an hour each time I went through. Many of the…
Ray, given the information provided in this post, how do you recommend we make the service free?
With all due respect, isn’t it too late? I think with the dynamics and investment (as said in this post) already involved, you’re going to have to charge the said amount. I honestly have no doubt that you’ll succeed in this endeavor as you have with your others, and it will be a great service.
In my opinion, when you start out with a project plan you decide how the project is going to benefit others and how it’s going to benefit yourself. Then in marketing the product you try to convince others that it will benefit them in a way that it worth what they would pay for it.
I guess I feel I have a need for this product in one shape or another, but not a need to pay.
And moreover I think that’s what is involved with
(Not that I am the one that initially said that statement.)
[…] 1. FeedLounge by Alex King, a web based feed reader. Working with Alex, I have found him to be an excellent developer, perfectionist, and savy business man. I’m a alpha tester, and I see a lot of promise in this product, but I’m stuck on the “price issue” […]
[…] The recent proliferation of free massive storage systems has changed user expectations for all hosting systems. Alex King, on user expectations at FeedLounge: When I hear someone say â€œa service like this should be freeâ€?, it feels a little like they are saying â€œyour time and investment are worth nothingâ€?. I know itâ€™s not personal, but to make a really great product, you have to invest yourself personally. […]