ambercelery started this topic @ 08:43 on 19/04/2005
I am need of some advice about about a product/service that i have recently developed.
I came up with an idea for a piece of software/web based service a few months ago and have come up with a working prototype. I have had a meeting with a patent attourney and last week submitted a patent application on the idea.
I am now spending the next few weeks producing a full version of the software/service from the prototype and hope to "go live" in the next month or so.
I am trying to work out the best way to allow people to use the service. I believe that I have two options and am unsure which is the best route to go down :
1) I charge users per each time they use the service. A user purchases say 10 credits for £1.00. Each time they use the service, they spend a credit. The cost is pretty cheap and shouldnt stop people from using the service.
2) I dont charge users for the service at all. I allow them to use it free of charge - and this will hopefully increase the number of people using the service. This would allow me to get a good number of people using the service (and testing it thoroughly in initial stages) . I would then be able to sell advertising space to companies on my service or the web site.
I am unsure as to the best route to go down.
The day to day runnings costs of my service are minimal - so i dont really need to charge for the service. My costs are the electricity for having a PC running 24 hours a day and having a yearly web hosting service (£40), plus the usual web site name fee's etc.
Obviously, i would like to have some income from my idea but as i said it isnt essential.
Can anyone give me any advice as to how much approximately could be made from advertising compared to charging users?
For example, if 10000 people looked at my web site - what revenue would be made from an advert appearing on this site? Or if an advert was included on 10000 emails being sent out from my service - what is an estimated income from this?
Also, for the initial few months, i believe that whatever route I choose (i.e. users pay, or advertising space) - I am best to allow people to use the service free of charge to build up the number of users of the service and to spread the word. Would this seem reasonable?
Any help in any of these matters would be greatly appreciated!
RE: Charge for service - or advertising space ??
James Smith | 19/04/2005 08:58 AM
I personally would go with (2) or some form of free initial usage until you build up a good reputation. For something that is free people don’t mind too much about PPC or impressions advertising on the site either.
Then bring in a charge for a "premium" version of your service in say 12 months time if things work out for you. I don’t see much point in strangling the site at birth by making it paid for unless you are selling something in high demand that cant be copied or bought else where.
Take AVG virus software. The free home user version has made it a big name, squeezing out the likes of Norton which is always a paid for product. Presumably they now make lots of money from companies who's residents techies have it at home after seeing it on discussion boards etc....
Hope this helps,
Regards,
------------------------
James Smith
Chartered Accountant
www.jamesesmith.co.uk
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Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT
RE: RE: Charge for service - or advertising space ??
ambercelery | 19/04/2005 10:21 AM
Many thanks for the advice James. I agree that even if the cost is small e.g. 10p - users ar still more likely to use the service if it is free as not only is it cheaper but it saves the hassle of having to buy credits and keeping track of credits.
Many thanks for your thoughts.