Comments on: Two Opposing Viewpoints On The Best Business Model

By: Matt Thomas

Matt Thomas — Fri, 16 Jan 2009 04:12:21 +0000

It depends on if the market is willing to pay and what your differential advantage is. If you are taking the marketing position that you are free when everyone else charges, it can certainly lead to a lot of pageviews (and thus, ad revenue).

Both business models make perfect sense. As long as you end up with more money in your pocket than you invested, and as long as the model is sustainable, whose to say that the model isn’t a good one?

By: AJ

AJ — Wed, 14 Jan 2009 11:49:34 +0000

I agree with Chris and you on that last point about both models working successfully.

We can even look at in the software business where you have the paid Microsoft Office Suite and the free Open Office competition. Microsoft will always have the corporate customers who need the stability and support of MS, while general consumers and students can benefit from the no cost Open Office.

By: Brian Armstrong

Brian Armstrong — Tue, 13 Jan 2009 20:35:26 +0000

Good point – what do you think about having a free account that is limited somehow (like a trial period of # of things you can use) for paid services?

By: Chiko

Chiko — Tue, 13 Jan 2009 11:29:55 +0000

I think a free website is better for the users because it gives them a chance to “sample” the website(product) to see if it’s something they would buy or use. Keeping the cost down for the users is never a bad thing (specially when it’s free). If the product or site is valuable, it will attract lots of people which comes with add offers and revenue.

So if you want to make money, focus on creating something valuable and be willing to give it away for free(for a limited time).

By: Brian Armstrong

Brian Armstrong — Mon, 12 Jan 2009 21:57:16 +0000

Hi Chris – yep I think 37Signals has been accused at times of being arrogant. They are certainly innovators though – so I suppose there is something to be learned from all people even if you don’t want to copy every aspect of them! :)
Thanks for the comment!

By: Brian Armstrong

Brian Armstrong — Mon, 12 Jan 2009 21:55:28 +0000

Agreed Troy – mission critical makes for good paid servies

By: Chris - Manager's Sandbox

Chris - Manager's Sandbox — Mon, 12 Jan 2009 21:39:48 +0000

I think your closing comments sum it nicely: “I think both models make sense. You have to look at how much value your site is really contributing to people’s lives. If you are helping them earn a living or save money, or performing a critical business task – then yes people will probably pay for it and you have a good business model to charge for.

But, on the other hand, if your website is a novelty, entertainment, or more fun for people than it is essential, or if you are trying to beat an incumbent who is already doing the pay model successfully – then maybe you have a good candidate for a free, ad-supported, website.”

I’m also a bit shocked at how smarmy David Heinemeier Hansson comes across in that quote.

- Chris

By: Troy Malone

Troy Malone — Mon, 12 Jan 2009 21:30:10 +0000

Subscriptions are where it’s at if you have a service that is more business oriented and worth paying for. On the consumer level, most things are free. The dating service is a great example. What a great opportunity to aggregate eyeballs.

I personally don’t think that you could do the same thing if you are catering to businesses. They will not tolerate ads in their mission critical applications!

Troy Malone
Pelotonics