I’m Adam Sachs and I run the world’s largest group dating site. Since our initial launch as a Facebook Application in January 2008 and subsequent relaunch as a destination site in August 2008, we’ve amassed a significant inventory of group daters using our free service.
However, if you’re simply growing a free user base at a steady, continuous pace (read: you haven’t detonated a viral bomb like only the Facebooks and Twitters of the Internet have) then after a while, the free model starts to seem unsustainable. Acquiring new users on a free site has a cost. User acquisition could be costing you money (PPC ads, live sponsored events) or even just costing you time (Commenting on blogs, marketing via Twitter). But until you can establish a lifetime value for a new user, then you are simply shelling out for marketing while seeing a virtually nonexistent ROI.
With no ROI and no value associated with each user who registers for your site, it’s only a matter of time before you run out of money, time, and the ability to keep acquiring them. Your investors probably won’t be too happy either.
It’s taken Ignighter a while to come to this realization, but now that we have, we are beginning to experiment with incorporating paid functionality into the website. Introducing a paid model to Ignighter doesn’t just benefit the company however; we predict it will benefit our user base as well.
Below are a few Pros and Cons that we predict to encounter when transitioning from a free to paid service. We can revisit these pros and cons in a few months and see how accurate they proved to be.
Pros: Money is finally coming IN the door.
- Money means more users. If you are making more per user than you are paying to acquire them, then the goal is to spend as much money as possible to acquire them. I’d pay $25 to get $35 back, wouldn’t you?
- Money means better users. When you offer a free service, you get registrations from people of drastically varying levels of interest and relevance to your site. When people on the not-so-interested-in-meeting-new-people-but-it’s-free-so-I’ll-try-it-anyway end of the spectrum register, they’re actually adding what we affectionately call “shit inventory” to the site and hurting the experience of the registered users who want to use the site for its intended purpose.
Incorporating a paid level will naturally introduce a tiered system of usership to the site, facilitating an experience that groups users based on their intentions and expectations. Asking people to pay will also help to make your users more passionate about the company. Paid users will now be part of a community that they’ve invested in and helped to create.
Money means happy investors. This one is pretty self-explanatory.
Cons: It’s not so easy
- It’s not so easy to convince someone to be one of the first to pay for your service. Before you can establish a track record of value that you’re providing to the user it can seem like you’re asking them to pay taste-tester to the King of Zamunda.
- It’s not so easy to build the damn thing. At Ignighter this fundamental shift is requiring a ton of web development and business development resources. This kind of thing can’t be half-assed, you have to give it your full attention and planning.
- It’s not so easy to accept that it’s going to work beyond a shadow of a doubt. But isn’t that what startups are all about?