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You have an idea of a software/app/webapp/website that you would like to spend some effort and implement. Your idea uses a cloud system to keep things up and you think you could earn some money by distributing your product and charging a small one-time fee. But there is a problem: the first thing you realize is that one day that user using your system may eat all the money he gave you with his indirect recurring little spending in the cloud. How would you do the math to find out if your idea was feasible?

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What if the product is an app for smartphone? (it is!) That run for the $0.99 price will preclude my price increase. Do we have successful examples in the market? Also, do we have examples of apps charging $0.99 over time? Another consideration, do I have to worry about this now or can I launch it and change plans later, when everything is going wrong? That is, is there a way to protect myself (sell the app and then block the users because I can't cover the costs and start charging monthly/yearly fee)? Sounds absurd. But doing otherwise may make the app non appealing when launching. –  Roberto Jun 10 '11 at 0:05
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You might start with the $0.99 version and later, in an update, include a "feature" that requires in-app purchases to buy more time. To be fair to your users, you might want to put something like "includes one year of free access to the cloud service" in the product description. –  user281377 Jun 10 '11 at 17:15

3 Answers 3

up vote 4 down vote accepted

uLoops, a server-based music creation software for Android, faced the same problem. Until recently, they had a model requiring a monthly payment. That's nice to cover the costs, but honestly, creating music on a smartphone isn't that funny that many people would spend EUR 5,- per month for it. So recently, they switched to a one-time payment of EUR 10,- Some people (including my humble self) pay up the 10,-, use the software for some time and then realize that they are not Mozart born again; so they do not cause recurring costs. For heavy users, they found a way to generate more revenue: To save the music on their servers, you need storage; the application comes with a quota of 50MB; once that is used up, users have to buy more storage.

So here is the short answer: Charge for a byproduct of using the software.

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Thank you ammoQ, could you please give some thoughts on my comment, in the question? –  Roberto Jun 10 '11 at 14:30

If the user can actually impose a cost on you greater than what they paid for the software, then you just arent charging them enough. Consider instead a long term subscription. Something like, instead of a one-time fee of $10, a yearly fee of $10.

Another option, if you are talking about using something like Amazon's cloud storage, is to sell the software, but require the customer to sign up for their own account, and thus bear the brunt of the hosting expense. Or open a second income stream by charging them for the hosting they use under your account.

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Thank you GrandmasterB, could you please give some thoughts on my comment, in the question? –  Roberto Jun 10 '11 at 14:30
    
I think AmmoQ's got the right idea... use an in-app purchase to buy more resources. –  GrandmasterB Jun 11 '11 at 5:29

Sounds like you need to diversify your product plans - you should introduce a pay-as-you-go plan, as well as a prepaid (limited to a certain credit amount) plan.

That should help if not make profit, then at least split even for a while.

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Thank you Jas, could you please give some thoughts on my comment, in the question? –  Roberto Jun 10 '11 at 14:30

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