[that_guy_iain]

Your numbers are wildly outthere.

$2.50 would be the API costs per user. So $5 would cover, take in some money and pay appstore feeds. And if you're looking at 10% of his userbase, that would be about 4 million a month income with 2 million being for Reddit. Based off his claims of 20 million a month with a $2.50 cost per user.

I'm sure he'll be able to survive off $1,000,000 a month profit.

Edit corrected the numbers:

$2.50 a user for API costs.

$5.00 a month subscription would cover that cost.

$1.50 going to AppleTax.

$1.00 a user to the indie hacker

If 5% of users that would cost $20MM sign up for $5 a month it would be $2,000,000 a month overall revenue.

$1,000,000 to Reddit.

$600,000 to AppleTax

$400,000 a month to the indie hacker.

[ta_6104828]

Towards the end of the video (around the last 7min iirc), he explains the business problem in better detail.

He says that he can charge more and still make a living. However, the price change goes into effect July 1st of this year. That’s less than 30 days from now.

The issue is all the current premium users who have 2-12mo left on their subscription suddenly become a huge liability. He cannot suddenly ask for more (against apple rules), and he must not remove features they paid for (apple will issue a refund to them).

[bee_rider]

I don’t know about the specifics of the business to intelligently critique your calculation, but it couldn’t possibly be the case that somebody turned down an easy million dollars a month, right?

[that_guy_iain]

If I was to guess, the standard indie hacker thought is happening "I can't raise prices" and "lots of people don't want to pay". When they're seeing 90% of their user base say I'm not paying that, it's easy to forget the 10% that would. The 10% that would probably haven't even spoken up.

And there is also probably a part of him that doesn't want to be greedy. But is it greedy to sell your software for $5 a month? I don't think so.

[bee_rider]

Is the 10% based on anything (I figure this is Hackernews so it is non-zero chance that you or someone else knows something about conversation rates for these kind of apps). My gut thinks it is high but I have 0 experience.

[that_guy_iain]

10% is a low estimate based on conversion rates I’ve seen people post on conversion rates. Standard apps with freemium the rates are 1-10%, Reddit however is used a lot so a mobile app will be used daily (900,000 daily users out of 1.2 million overall) it already converts at 1.50 a month. It would be somewhat reasonable to think Spotify-conversion rates of 30% would convert.

[bee_rider]

That’s pretty good.

Dang, maybe there’s room to make a Reddit app, haha.