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Hello GH, I have just launched a small app called Email This (https://www.emailthis.me) and I am thinking of letting the app be free to use, but asking members to contribute $1+/mo if they find continued utility in the product. Does anyone have any suggestions or insights regarding a donation-based SaaS? It is a good idea or should I stick with a regular Free ("save xx articles per month") /Premium ("save unlimited articles per month" model? Thanks, Bharani

  • HL

    Hongli Lai

    over 3 years ago #

    I developed a software product for web developers, called Phusion Passenger. It started out as a completely open source product, where we allowed people who find our product useful to donate what they want. The product itself was a hit: when it launched it filled a clear need, so people were excited and donated "a lot". Looking back, people donated a couple thousand in the first few weeks. These donations gradually tapered off: after a year or so we would get at most a couple hundred dollars a month in donations, despite the fact that we kept improving the product. I was happy with that because I was a student, and it did not take a lot of money to impress me (hence why I put "a lot" in quotes). But looking back, the amount revenue was simply unsustainable. The amount of donations depended on hype, and you normally only get on the hype train once.

    Another problem was a lot of people simply don't want to donate. If you want their money, they must get something in return. Some people say, *they* want to donate but they can't convince their boss. In other words, it must be a business transaction or they won't accept it.

    Finally, donations were not recurring. It is hard to convince people to donate regularly. Again, this becomes much easier if it's a business transaction.

    So I don't recommend the donation route. Most people are not incentivized enough.

  • AA

    Anuj Adhiya

    over 3 years ago #

    This is a slightly older link - and it also applies to an ebook rather than a SaaS product but I thought there were some great insights in here that may still be relevant for you: http://tommorkes.com/wp-content/uploads/2013/12/In-Depth-Report-of-a-Pay-What-You-Want-Product-Launch.pdf

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