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Maximizing subscribers (and revenue) for my web-based stock option analysis system

Posted on 2014-04-23
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Last Modified: 2014-04-29
Hello EE Consultants, I would really value your thoughts on this: I'm about 70% done on a stock options financial analysis software, that takes a really original angle at analyzing options and finding the one that yields the most profit. I plan to implement this in "Delphi-for-the-web" (ie. Intraweb by Atozed software) and ultimately charge users a monthly subscription fee to log in to the site and use the software (anywhere from $10 to $50/month... not sure yet). Anyway, I'm wondering what approach would garner me the most subscriptions and ultimately, revenue :

(a) Launching it on a paid basis right off the bat, and build up subscribers as I go.

or...

(b) Launching it as a completely free service, getting - hopefully - thousands and thousands of subscribers... letting it stay free for 6 or 7 months or so, then announcing something like "server costs have become too high, I'm afraid I have to start charging a nominal fee". By that time, I might have a hundred thousand subscribers (who knows? People love free stuff) and many of them might find my analysis indispensible by that time. To maximize revenue even further, I was thinking I could then take a random sample of a thousand or so of my subscribers and through a clever "questionnaire", determine what price they would be willing to pay for the service going forward


As you can tell, I like the potential of option (b) and I'm leaning towards that. But what do the experts think?

Thanks!
    Shawn
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Question by:shawn857
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akb earned 500 total points
ID: 40019485
Option b. LogMeIn have a similar business model. They had a free product for years. I used it for years. Then they dropped some functionality which you could then purchase through LogMeIn Central. I was so committed to the product that I subscribed. Recently they dropped the free product altogether and I know many users who willingly paid for the Pro version.

 If you can get users hooked on the free product then they will see the value and should be willing to pay.

Why not be up front and tell the users it will be free for X days then they can subscribe if they wish to continue?
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Expert Comment

by:regmigrant
ID: 40020726
if you have real faith in your product and believe it will make subscribers money you can offer a 'free if you lose money' option and charge basis points for those who make a profit
thus demonstrating your willingness to share the risk and confidence in what's being offered
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Author Comment

by:shawn857
ID: 40021374
Thanks guys. Regmigrant: I don't think I'll go that route actually. My software isn't a "trading system" per se, so it wouldn't quite fit your suggestion.

AKB: Yes I use Logmein too and noticed this recently that they are terminating free usage! Well, if it's good enough for Logmein, then I guess it's good enough for me...

AKB, to respond to some of your points:

 "If you can get users hooked on the free product then they will see the value and should be willing to pay."

>> I sure hope so. It does make sense to me though that this would be the best approach - have a "captive audience" and get them so in love with my software that they subscribe... willingly or grudgingly  ;-)


"Why not be up front and tell the users it will be free for X days then they can subscribe if they wish to continue?"

>> Well, I'm thinking it may "scare" some people off from initially subscribing - they'll just be thinking "ok, here we go again with the ol' bait and switch tactic". But I could be wrong.
   Also, I'm not sure what is a good length of time to keep it free before announcing free use is over... 6 months, 8 months, a year?? Has there been any studies done on that or is it just a arbitrary decision?

Also AKB, what do you think of my idea to "take a random sample of a thousand or so of my subscribers and through a clever questionnaire, determine what price they would be willing to pay for the service going forward"? Would this be worthwhile, as opposed to just picking an arbitrary price per month out of thin air?

Thanks!
    Shawn
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Expert Comment

by:akb
ID: 40021513
I'm unaware of any such studies.

You definitely need to get the price right.
Too high and you'll lose more subscribers than you would otherwise - you will lose some subscribers even if you only charge 5 cents. Once you lose them you will have a hard time getting them back even if you reduce the price. Also, if you later reduce the price then your loyal subscribers may feel ripped off.
Too low and you'll lose money.
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Author Comment

by:shawn857
ID: 40028018
Thanks AKB... any tips/strategies on how to decide on an "optimum" price?

Cheers
    Shawn
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Expert Comment

by:akb
ID: 40028279
I like the idea of your "clever questionnaire". If you have a clever way of surveying your subscribers then I guess that would be the best way to determine the optimum price.
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Author Comment

by:shawn857
ID: 40028359
OK. Would you have any suggestions on how long to leave it as a "free" service?

Thanks
    Shawn
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LVL 13

Expert Comment

by:akb
ID: 40028373
I think that would be a decision you need to make after the launch. Wait and see how quickly people are subscribing. You need to give them time to get "hooked" on your product. You may need to some time to iron out any issues with the software. Maybe survey your subscribers to find out what enhancements they would like. Maybe consider two subscription levels - one free and one paid with more functionality. You could survey them to find out how they feel about an optional paid subscription. Like LogMeIn you could then move some of the best features from the free version to the paid version. Food for thought...
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Author Closing Comment

by:shawn857
ID: 40030855
Thanks akb!

Cheers
   Shawn
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