How do you make money from your free applications?

http://codejustin.com/how-do-you-monetize-your-free-applications/

by CodeJustin • 17 years ago

44 28 17 years ago

codejustin.com

CodeJustin2• 17 years ago

Share you ideas and thoughts about how to generate revenue from releasing free apps/games/software!

Chocobean• 17 years ago

Donations.

If you are employed to write software that solves a problem your company is willing to pay for, you receive money.

If you are self-employed to write software that solves a problem many people are willing to pay for, you receive money.

If you are self-employed to write software that doesn't solve problems, or solves problems people aren't willing to pay for, you will NOT receive money, and any means that you deploy to try and extract value out of people will be seen as a nuisance.

Free apps, especially online games, are like a street performer's music:

-they make you smile when it's good, and not look back if it's bad

-they're free

-you didn't plan for it, or travel far just to hear it, you likely happened upon it

-you may return to the street corner on your way home

-you will not return if you do not have time

-you will not return if the performer pestered you for money

-you may decide to tip the performer

-you will decide not to tip the performer if he seems dangerous, aggressive, or otherwise inquisitive about your private life

TO be fair, apps do these advantages:

-you don't have to physically return for a repeat experience

-24/7 performance

-very easy to spread by word-of-link

Use these to your strength, not to boost your ego to think that you are a "totally different" revenue model.

So how do street performers make money?

-receive donations

-not pester listeners for donations

-not being scary perv/stalker, or looking like one

-sell content not available for free

-sell content collected in a nice, convenient package/album

A lot of sites will list all the content they have, and when you click on certain ones, tell you that they are for "premium customers only". Why wait till the user clicks on it? To go back to my street-performer analogy, it's as if he asks if you'd like him to play you Pachelbel's Canon, and you say, yeah that'd be awesome, and he stretches out his hand. You feel deceived. You may pay out of guilt in real life, but in cyberspace, you just leave and go download the equivalent, from a well-reputed/professional/famous source, for free. Always tell the user this is paying content before wasting his time.

Anyone else?

patio11• 17 years ago

Charge your paid competitors 2.00 CPM so that they can earn 80.00 from same users.

Well, thats what my competitors do, anyway...Trust me, I wish them outlandish success.

Anyhow, I use free stuff as a friendcatcher for organic SEO, etc, and then turn rankings into money via paid apps. Also have a free trial, consider it a no brainer.

csbartus• 17 years ago

Using the last.fm business model: for me it is the perfect example of service quality + pr + revenue.

You cannot find a better music service on the web, you cannot find worst communication strategy than they have (negative promo is better than positive promo, the first rule of pr!) and soon the press will be flooded by their success story.

j2d2• 17 years ago

last.fm is a pain in the ass. you simply cannot use it to find a single song and then listen to it.

http://www.last.fm/music/Mastodon/_/Divinations I want to listen to divinations, tell me the sequence of clicks for doing this on last.fm.

mbrubeck• 17 years ago

If Last.fm had the rights to let you play that track, you could play it using the big "Play" button in the top right corner. Here's a song that is playable: http://www.last.fm/music/Mastodon/_/Iron+Tusk

But it's up to the rights-holder to decide whether to license the music to Last.fm. It looks like this band has only a few playable tracks: http://www.last.fm/music/Mastodon/+charts?rangetype=week&...

mixmax• 17 years ago

With today’s economy I don’t see much hope in releasing an application that cost money.

I strongly disagree with this. Consumers and companies still use money, they just use less and, importantly, use it differently. B2B markets are particularly interesting right now. There are thousands of companies looking to cut down on their IT spending, trying to locate better and cheaper options for their expensive solutions.

Make a cheap standardised Intranet to replace the corporate behemoth that costs thousands of dollars every year, make a helpdesk application that can cut down on support costs, offer a cheap hosted VOIP solution that saves on phone bills.

The possibilities are endless, and if you call up a company telling them that they can save money using your product they'll listen.

edw519• 17 years ago

Excellent advice! This is exactly what I'm doing and I'm busier than ever. As budgets tighten, companies are looking for better (cheaper) ways to get the same work done. It's times like this that enable major shifts. OP has it exactly backwards. I can't imagine releasing a free app right now when the pickins' are so good.

A couple of recent examples:

One company has a lot of clerical work but a hiring freeze. I automated their intranet-->fax function, freeing up enough time to get more work done with the same number of people.

Another company had to push out all of their purchase orders for the next 18 months because their revenue stream was slowing down. A nice little 3 week project for me.

Another company had planned on getting a new Oracle product for $500K until I showed them how to get the same output from their existing system for one fifth that amount. (Hopefully they'll have me do that work.)

Notice the pattern: slowing economy --> more IT work --> everybody happier.

chipmunkninja• 17 years ago

I don't. I did a lot of research and talked to a lot of people. In the end, I decided there wasn't enough money in it to make it "worth it". I figured I could make a few k a year, and the amount of hassle it would have taken would be well less than me just contracting out at normal rates for the same period of time.

So, instead of risking alienating users with various money making schemes, I just give it away, and try to use torrent networks as much as possible to keep bandwidth costs down. I'll just be happy with high user numbers and the fun of writing the program (obj-c/mac), which is kind of why I started in the first place.

trapper• 17 years ago

Sorry but there is something that wrong here. If your product really helps someone, and is worth more than the $ you are asking to them in terms of time, pain or effort, why wouldn't they pay again?

olefoo• 17 years ago

There are several categories of application that are useful, even essential but that are very difficult to monetise.

Basic utilities like ls, or jpeg which people expect to come with the platform are difficult to charge for. And then there is grey market software it may be that non-commercial distribution is not subject to the same degree of opposition that a commercial distributor would face.

jlsonline2• 17 years ago

I know it's currently in-fashion to give everything away for free but I personally think most reasonable people (that is to say, the ones you actually want on your site) don't mind paying for something of value.

Create a product. Charge a fair amount. Provide outstanding value.

It has worked for us. I'm no billionaire but I'm doing a hell of a lot better than 99% of the other 35 year-olds around me doing something I love and providing a product I can stand behind.

davidw• 17 years ago

> doing something I love and providing a product I can stand behind.

... but not link to in your profile? Sorry, but I'm curious about things people do that work out for them:-)

Also, yes and no. Sometimes the economics of these things don't work out to be quite so simple. Solaris is a great product in some ways, but it's not that much better (and in other ways is worse) than things that are available for free like Linux and *BSD.

In other words, it's important to find a niche where people aren't going to rush out and create free competitors...

jlsonline2• 17 years ago

Unfortunately, the industry we provide a service to is mired in local authority politics, so I can't disclose here. I'd like to be able to say "fuck, that is ridiculous" without someone picking up on it someday and killing my business as a result. We're proud of the product but the industry itself is very cutthroat with only a few players. It was hard enough to carve out the market we have. So, this is my personal account. That being said, it's a great market for some of the same reasons. Our current contracts are 8-10 years (but it takes a lot of blood, sweat, and tears to get them.)

Having said all that, I still disagree with your Solaris vs. open source argument in principal. You don't have to have a huge amount of customers to be doing well to me. If 95% of the people are using an open source product but you still have 5% clinging to you because they love it and you're profitable...is it really so terrible?

Of course, if you build a business, you want to be mutable anyway. You can't just sit around hoping product X will feed you and your employees without some sort of proactive business development. As part of that, you always have to be prepared for someone smarter and more agile. You play to your strengths. If you have market share, you leverage it. If you have agility, you leverage that instead.

Edit - One of the things that doesn't get discussed around here often enough, is the ability to form and execute as proper business. Your product is not (or more accurately perhaps, should not necessarily be) the entire definition of your business. Any business that expects to be around in the future must generate income. Competition is always going to be there in one form or another. If that competition happens to be people who like to work for free making open source products, it could be a mountain to climb to compete directly. The business may have to adapt in other ways.

I'll give an example of that. Everyone in our industry used to provide an embedded software component that required an OS that had a license associated with it. One of our competitors pitched an idea to build the same software using Linux. It very likely could have crippled us had they managed to deliver something at a much lower cost. So, we went through negotiations and tried to acquire them. Those negotiations failed but we realized that they really weren't close to that open source solution at all. We jumped at the chance to develop our own open source product and it is now in pilot locations. Nobody else in the industry has even blinked and we can suddenly cut some really outrageous costs out of our equation.

So, the beauty of open source, is that it's open to everyone.

jasonkester2• 17 years ago

Why not just build something people will pay for?

Quit building little one-day hobby projects that don't do anything useful, and instead build software that people with money will pay for. It's not that difficult a concept to understand, yet every day you see another half dozen unjustifiable little web startups appearing with no hope of ever making money.

  - Build something good.
  - charge money for it.
  - Sorted.

run4yourlives2• 17 years ago

Although I agree entirely, the direct answer to your question is: Because that's much more difficult.

jasonkester2• 17 years ago

Actually I suspect the real answer is: Because it's not as much fun.

S3stat pays my rent, and it took a weekend to build. It's dead boring, but there's a market for it so people pay money.

Blogabond is still fun to play with 4 years in, was technically hard when I built it, and thousands of people use it and love it. When I tried putting ads on it, it brought in maybe two bucks a day.

So yeah, boring stuff makes you money, even if it's not that difficult.

wlievens• 17 years ago

Not just difficult to build, but also difficult to come up with a decent idea.

modoc• 17 years ago

You can make okay money with ads. I don't make "quit my other work and just live off the ads" money, but I do make "buy a nice new german sports car and have the ads pay for monthly payments" money. Which is nice. And that's just with one site.

alain94040• 17 years ago

What's wrong with charging money for a good product? We geeks are a vocal minority that loves for everything to be free.

Guess what! 90% of the population doesn't care. If it solves a problem and is reasonably priced, then it's a no-brainer and they'll get their credit card out of their wallet. It's not extortion. It's about providing value and charging a fair price.

For desktop software, you can be nice and still charge money. Offer a free download and trial period. Or offer a free version with some limitations and an unlimited version for a price.

For online services, the same applies. Craigslist is free for almost everything except job ads. That works.

Gratis vs. Libre: that may just be the next big thing in the evolution of the Internet.

brc• 17 years ago

Stop being afraid of the market and put a price on your applications. It's tempting to give stuff away so you feel like people want your applications, but the real test is whether people will pay for your application. Or maybe deep down you think your code isn't good enough, or you don't want to support it, so you want to keep it free.

'The Economy' is a lousy excuse to not charge for it. Maybe you'll sell 20% less than in boom times, but you'll still sell if your product is good enough. Finish your product (includes documentation and marketing), put a price on it and start charging.

chubbard• 17 years ago

I'm probably crazy for trying to breach this topic on a forum. It probably would take a very well thought out blog post to get my point across. But, this topic touches on a very important issue in software we face right now. Over the lifetime of the software industry we've experimented with lots of interesting business models. Some have panned out better than others. My suspicion is that selling software has been the most profitable. Preliminary evidence from iPhone app store has seemed to agree this as well.

Prior to 2000 IT industry was making large sums of money mainly from selling software. After the dot com bubble lots of companies selling software took a hit too. The bust wasn't limited to the web. Lots of customers realized they weren't getting the ROI from the software they purchased. Since then the industry fundamentally shifted.

The rise of open source software started to replace previously commercial software. In many respects were much better in quality than commercial software. Linux was making serious advances towards Microsoft's dominance in the server market. And, since then open source software has matured and has advanced rapidly into markets previously dominated by commercial software vendors. Once open source software options come into these markets they exert serious downward pressure on the ability for commercial companies to stay viable.

Take for example BEA. In early 2000's BEA was a market leader with it's Java application server. In fact BEA was the fastest growing software company ever, and I think that's still true. Over $1 Billion in sales in under 5 years. Amazing. Then JBoss showed up. In many respects JBoss' application server was superior to BEA's. Once JBoss came in they created serious pressure on BEA's ability to sell their server. Why purchase BEA when you can get a better server for free? In the end both companies were sold. Red hat bought JBoss for around $350-$400 million. Oracle snapped up BEA for $7 Billion.

Open source has proven itself as the best way to build software. However, it's the worst way to monetize it. Selling software works.

Zoasterboy• 17 years ago

The question is now, how to sell open source?

CodeJustin2• 17 years ago

Thanks a lot for all your great feedback guys! You are all right too! I crunched the realist numbers and assuming I can get 1/10th of a percent of my visitors to buy one of my software products at an average price of $10 than I will make lots more than using an ad program with a 4%CTR and a heck of a lot more than an ad program doing cpm!

How do you make money from your free applications?

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