I was reading an interesting debate today on how apparently a lot of businesses that use a free to use model while charging for premium services can usually make more money than ones that charge the fee upfront. Example, imagine using a community site where it is free to interact with others but costs money to say spruce up your profile. This is compared to say a community site that simply charges you one monthly fee upfront to use everything.
I guess the simple explanation is that there are more odds that the free method will allow you to potentially create a bigger pool of people who could potentially spend money. Example, one place with 150,000 people that spend only $5/month versus a site with say 50,000 that spend $10/month. Iâ€™m always surprised at the things people pay money for.
Example, in some sites you can send people â€œvirtual giftsâ€ that cost one real dollar. Sure enough, millions of people do it all the time. Sure makes you think if you are trying to create a business that revolves around social interaction and entertainment.