I was thinking about this when I read pinboard’s blog about The Cost of Bookmarking and when Ben Brooks reiterated it and linked his post to Nick Sabato:

Make something cool, charge people for it, take their money, keep making cool stuff. Sadly, an awful lot of people don’t practice it.

When Silicon Valley started most of the business model is based upon the notion of “If we build it, they will come”. It’s been a successful business model but only in one important factor: attracting user base. The problem they struck within this business model is how to get paid for your handwork. It’s always about getting more user then worry about making money. But as it is no one is willing to pay for a service they’ve been using for a year or two and it’s frustrating as hell that your successful business doesn’t make any money at all. Serving ads won’t cut it anymore in this time and age. You have to build cool product that people will want to pay for. Look at Twitter, Tumblr and Delicious ¹. They have created compelling products and services that few people is willing to pay for because they’re also afraid of losing half of their users if they ask for money. ²

It’s a sad fact, really, creating a great product that no one wants to pay is the kind of business that you don’t want to get into. Tumblr, Twitter and Delicious is suffering from this and they can focus on making their product better by offering to get paid by their users. They don’t have to worry about money and they can focus their energy more by serving their user. A great example is a bookmarking service called Pinboard. A one-time paid service that emphasizes on speed and reliability. When Yahoo announced that they are planning to kill off delicious many of it’s users switched to Pinboard. Flickr is also able to improve their service and offer greater value to their pro users. Evernote, dropbox & Instapaper is thriving with their free and paid services.

And why would people want to pay if they can get it for free you may ask: It’s quiet simple, if the service you are using don’t need to worry about money you can bet that they can give an unprecedented service and you don’t have to worry about the company closing down it’s business. And if you really value their services it’s only fair that you pay.

My suggestion for any start up/web services:

1. Create a great product and offer a paid service.
2. Offer a pro pr premium service that may benefit your power user without alienating your free user.
3. Don’t cripple your service only to offer a paid service.
4. You don’t need a large user base, you only need users that are willing to pay for your handwork.

I am no expert when it comes to building a great service but I know that I am a customer willing to pay for a better product and services.