There is a lot of discussion going on about web apps and monetization. Some people take very concrete positions that “you have to charge your customers or you won’t last” or “make it free because everyone else is”. I believe that all options can work; find the plan that fits the product.
Free
The free business plan works just fine these days. Sure, advertising revenue is going down but so is the cost to create/maintain (drastically). If you can afford $72 a month then you can afford to start a startup (obviously I’m generalizing here). Venture capitalists have money that they are itching to spend and a little bit goes a long way these days. It’s just not as expensive or risky as it used to be to start a company. Use open-source or free solutions whenever possible and spend frugally; you’ll have no trouble.
Pay
People are more willing than ever to pay for services that solve a problem. Some services that I pay for:
I don’t need any of those services but I like them so I pay for them. They don’t need to have a free alternative because they solve real problems. I like to watch TV but it doesn’t always fall in line with my schedule. I’d like to have my own server to do development on that doesn’t sit in my apartment and increase my energy bill. I don’t like walking through Blockbuster and would rather have movies come to me. These companies solve those problems.
Freemium
Ah the freemium business model. Hook the user in with basic, free accounts and then charge them for extra features. 37signals has built an entire company around providing free accounts to lure paying customers in. Clearly it is working well for them. It’s also working for Flickr and Remember The Milk (both of which I pay for). I love the freemium model. I don’t mind paying for something that I really like using as long as I’m getting something extra in return. Maintaining an online gallery was cumbersome and annoying. I could have used the free version of Flickr but then I’d be limited to how many photos I could upload per month. Paying them $25 a year (a bargain) saves me a lot of trouble. Likewise $25 a year for task syncing on my phone from Remember The Milk is cheap and helpful.
So don’t let anyone tell you that you have to follow one plan or the other. They all work; find the plan that fits your product, don’t lose sleep over it, and work on providing the best product you can. Everything else will fall into place.
