[cs702]

Insightful.

On the other hand, many self-funded businesses are doing quite well charging for services targeted to non-mass markets -- for example, SmugMug (for professional photographers), FreshBooks (for invoicing & accounting), 37 Signals (for team productivity), etc. Some of these businesses are essentially one-person operations -- e.g., AppointmentReminder.org.

I would include FogBugz in this list.

"Make something and get people to pay for it" seems to works well for many vertical/specialized markets, some of which are quite large.

[npalli]

Smugmug -- started 2002

Freshbooks -- started 2004

37Signals -- started 1999, basecamp in 2004

FogBugz -- started 2000

Point being, these are "old" business. If you are starting something today with all the hundreds of thousands of free apps and freemium based models, the same lessons would not apply.

[ProblemFactory]

All of these are also apps for businesses, not casual entertainment for consumers. Also, they are mainly delivered via web, not Apple or Google app stores, which makes it possible to offer a time-limited free trial with no free plan.

I'd hypothesise that both of these are more important factors than being started in 2003 vs 2013.

For a freelancer, $100/month is a good deal if it allows you to get a few more billable hours per month. For a larger established business, $500/month is pocket change that nobody will even notice (and the customer who signs up isn't even spending their own money).

[peterjancelis]

Google Apps marketplace allows for free trials.

[patio11]

n.b. I'm honored to be included in that august company, but just to avoid people getting the wrong impression, Appointment Reminder is quite a bit smaller than every product on that list.

With regards to the larger point: there are many, many ways to successfully take money from customers.

If you want to build a business mostly on the $20 to $50 per month low-touch SaaS model, you can do that, quite successfully. (ConstantContact, 37signals, SmugMug, etc)

If you want to build a business which addresses customers with low-to-medium touch sales and costs between $25 and $X,000 per month, you can do that.

If you want to build a business which dogfights for $75k to $250k a year enterprise deals, you can do that. (Welcome to the world of boring enterprise software, where there exists surprisingly little visibility since the relevant people don't blog so often, but it basically makes the world go round.)

If you want to do a hybrid low-touch model in the $20 to $50 space, mid-touch in the $X00 to $X,000 a month space, and high-touch in the Enterprise space, you can do that, too. (Some companies move there after discovering that the mathematics of the low-end model are a bit painful if you happen to hit constraints on e.g. market size.)

[wensing]

Based on our experience, this all rings true.

And may I suggest zero touch until you get to $XXX/mo or you are very, very confident that Mr $50/mo will almost never ever cancel.