The Downfall of Offering a Free Plan
Adding a free plan to your product may seem like a good idea, but it can actually be detrimental to your revenue. I once spent over a year developing a habit tracker that had both a free plan and a premium plan. The intention behind the free plan was to allow users to try out the product and hopefully convert them to paying customers. Despite attracting 140,000 visitors to the website and gaining 10,000 sign-ups, I only made $6,000 in revenue for the entire year. This was a minimal return considering the amount of time and effort I had invested into the project.
Failure to Prioritize User Needs
One of the key mistakes I made with my side projects was focusing too much on my own ideas and not enough on what users actually wanted. It is essential to create products that people are willing to use, love, and pay for. By understanding and fulfilling the needs of your target audience, you are more likely to generate revenue from your side projects.
Lack of Marketing and Promotion
Another common mistake that can prevent side projects from making money is the failure to effectively market and promote the product. Even the most innovative and well-designed products will struggle to generate revenue if they are not properly advertised. Investing time and resources into marketing strategies can help increase product visibility and attract paying customers.
Ignoring Feedback and Iteration
Feedback from users is invaluable when it comes to improving your side projects and increasing their profitability. Ignoring user feedback and failing to iterate on your product based on this information can hinder its success. By continuously listening to user suggestions and making necessary improvements, you can create a product that meets the needs and expectations of your target audience.
Failure to Monetize Early
One of the most critical mistakes I made with my side projects was waiting too long to monetize. By prioritizing user acquisition over revenue generation, I delayed the profitability of my projects. It is important to implement monetization strategies early on and create value propositions that incentivize users to become paying customers. By focusing on revenue generation from the outset, you can increase the financial success of your side projects.
The Reality of Free Plans
So here is the red pill. Only 3% of free users will upgrade to the Premium plan. Lets take an example lets say you have a free plan and a $10 per month plan. That means your average user is worth 30 cents to your business. Now lets say that you need about $3000 per month in order to maintain your lifestyle. That means you will need 10,000 new users every month or about 75,000 monthly visitors.
The Insane Amount of Work
I don’t know how about you, but that sounds like an insane amount of work for a solo entrepreneur, especially if you have a 9-5 and you have to handle everything for your startup from the legal, the customer support and all that.
The VC Backed Startups
So why do we keep seeing free plans everywhere on the Internet? Is because all those startups are usually VC backed? They have a lot of money so that they can spend hundreds and thousands of US dollar into marketing. So they collect a bunch of user feedback and they can build the next unicorn. But if you’re like me, you might want to stay solo and you might have a limited marketing budget if any, and you cannot afford to spend thousands of US dollar to gather feedbacks.
Alternatives to Free Plans
There are three alternatives to free plans. In case you somehow need to show a part of your product to customers before they purchase, the first one is offering free credits. You basically let your users try your product, but for a very limited usage, just so that they know what the product is about.
Using a Short Free Trial with a Credit Card
One alternative to monetize your side project is to offer a short free trial that requires users to provide a credit card upfront. By asking for a credit card, you increase the chances of user commitment as they are more likely to utilize the trial. It is important to keep the free trial period short, typically 7 days maximum, to encourage users to commit.
Creating a Free Standalone Feature
As a developer, one effective strategy is to extract a standalone feature from your app and offer it as a free tool. A great example of this approach is seen with tools like Ahref, where they provide a free keyword research tool. Users can access basic features for free but have the option to upgrade for more advanced functionalities. This method allows users to experience the product without any financial commitment.
The Benefits of Building Free Tools
Developing free tools not only fulfills the creative needs of a developer but also serves as a valuable marketing strategy. By offering free tools, you can attract a larger audience and generate interest in your main product. Launching multiple free tools over time can help drive traffic and build a community around your brand.
Avoiding the Shiny Tech Syndrome
One common pitfall that side projects face is falling into the trap of constantly chasing new technologies and features, known as the “Shiny Tech Syndrome.” It is important to focus on building and improving the core functionality of your product before exploring new avenues. By staying true to your vision and goals, you can avoid distractions and increase the chances of making a profit from your side project.
Stick to Your Tech Stack
As a developer, it can be tempting to constantly try out new tools and libraries that promise to revolutionize your workflow. However, constantly switching between technologies can actually hinder your productivity. By sticking to a consistent tech stack, you can become more familiar with the tools you are using, resulting in fewer bugs and increased productivity.
Focus on User Needs
While new UI components and design trends may be exciting to implement, it’s important to remember that users are ultimately looking for solutions to their problems. The shape or color of buttons may not matter to them as much as the functionality of your product. By prioritizing user needs over aesthetic features, you can create a more effective and user-friendly solution.
Avoid Distractions
With the constant influx of new tools and technologies being promoted on social media and tech blogs, it’s easy to get distracted from your main goal of making money with your code. All those videos and tweets can be a source of distraction that takes you away from focusing on what truly matters – delivering value to your users. Avoid falling into the trap of constantly chasing the latest trends and instead, stay focused on your core tech stack.
Choose a Reliable Tech Stack
When it comes to building side projects that generate income, reliability is key. Choosing a tech stack that you are comfortable with and can rely on is essential for long-term success. Constantly switching between technologies can lead to inconsistencies in your codebase and hinder your ability to deliver high-quality products to your users.
The Impact of Subscription Models
When considering pricing models for your side project, it is essential to be mindful of the impact that subscription models can have on your sales. While subscriptions can offer a sense of stable income and predictability for business owners, they may not always resonate well with users. The mental process required to commit to a subscription, thinking about future usage and potential cancellation, can sometimes deter customers from making a purchase.
The Conundrum of One-Time Payments
In contrast, one-time payments can be more appealing to users as they provide a sense of immediate gratification without the associated long-term commitment of a subscription. However, selling a higher-priced one-time product can be just as challenging as selling a lower-priced subscription. The drawback here lies in the fact that users may be hesitant to make a larger upfront payment, even if the overall value of the product is worth it.
Case Study: The Landing Page Generator
Take, for example, a developer who created a landing page generator using AI technology. Initially priced at $39 for a one-time purchase, the product was generating $100 to $200 in sales per day. However, when the developer decided to switch to a $5 per month subscription model, sales plummeted to zero. Reverting back to the one-time payment option led to sales picking up again.
Customer Retention Issues
Another challenge with subscription models is customer retention. Users may sign up for a subscription one day but decide to cancel it the next. This constant churn can make it difficult to maintain a steady stream of income over time, as there is no guarantee that users will continue to pay for the service in the long run.
One Time Payments
Unless you have an excellent service, your users will churn as a business owner. One-time payments, like purchasing a book, may bring in initial sales online. These types of payments can be pleasing for customers and help you generate revenue initially. Depending on the product you are offering, you may have minimal costs associated with running the service. Bandwidth costs, for example, are often negligible. Even with high traffic, profitability can still be achieved over the years.
Subscription Models
If your service expands and attracts more users, you can consider implementing a subscription model for new users. For existing users who have already made a one-time payment, you may choose to grandfather them in, allowing them to continue using the product without additional costs. This can help retain loyal customers while also attracting new users who are willing to pay a subscription fee.
Pay-Per-Use System
If your side project incurs recording costs, such as creating an AI wrapper around an open AI API, you may want to consider a pay-per-use system. Similar to the model used by open AI, users pay only for the usage of your product. This system can be fair to users, as they are only charged for what they actually use. This pricing model may become more prevalent in the future, replacing traditional subscription models.
Start Simple
It is advisable to start with a simple payment model, such as a one-time fee or pay-per-use system, before exploring more complex pricing structures. By initially offering a straightforward pricing plan, you can attract customers and later adjust your pricing strategy based on feedback and market demand.
The Importance of Your Headline
The H1 tag first impression matters when you meet someone randomly in the street how they behave, how they look, what they say will influence every decision youll make about this person. Its the same with your website when youre selling a product online. Your headline is the first impression – and this is going to be the most influential part on whether people will decide to buy or not your product. In average, a website conversion rate from visitors to customers is about 2. If youre getting started, it is likely going to be more like 1, even less. So for every 100 visitors, youll get one user. That means that most of the people who visit your website will never see your product, but 100 of the people who visit your website will see your headline. So make sure you spend enough time crafting a really excellent headline before launching. Your headline should be short, trigger an emotional reaction, and answer the question of: why would a random stranger on the internet give me 1 minute of their very precious time?
Avoid Over Engineering
For my first entrepreneurship project, I spent an entire year building a startup. I wanted it to be perfect with a bunch of features, user onboarding, and dozens of screens. By the end of the year, I burned out and I managed to get zero users and made zero dollars. We’ve seen earlier that about 1% of your landing page will convert into paying customers, so most people will never use your product. To avoid shipping features that people don’t need, avoid over-engineering your project.
The 24 Hours Startup Framework
I recommend you to try the 24 hours startup framework. If you had to create any startup in 24 hours, how it would look like if we talk about Airbnb, it could be just a single spreadsheet, and if we are remaking Instagram that could be a public Google Drive Im, not saying you should Che a sketchy version Of your product, but Im saying that, instead of having a big master plan for your startup start with a very tiny version, the 24 hours version of your startup as a b line and start building from there.
Categories for Removing Features
1. Remove Anything Invisible to the Customer
In my case, I remove a bunch of things from the first version of the product. There are three categories. The first one is that I remove anything that’s invisible to the customer, so I do not test my code. I do not use git branches. I ship directly to production and I do not use typescript and there is a big support button on the website in case if anything goes wrong, but that really doesn’t open.
2. Remove Everything that doesn’t have Direct Value to the Customer
The second part is that I remove everything that doesn’t have direct value to the customer. So there is no dark mode. There is no professional logo. There is no reset password form, for instance.
3. Remove any Secondary Feature
Finally, I remove any secondary feature. Customers come to my website because they have one problem and that problem is usually solved with one feature. Anything that is not about that feature will be removed from the verse version of my product.
Launching Too Slowly
The goal here is to launch your product fast, so you get real user feedback early and you can build the right features for them and make some money.
Working in Isolation
I have been building tiny startups in public on Twitter, with 100 of other developers, and the five mistakes I just shared is usually what sets apart the solo developers who actually end up making money with a site project and those who dont.
Overthinking the Side Project
If youre one of those developers who overthink their side project, its important to take action and launch your product rather than getting stuck in the planning phase.
Not Listening to User Feedback
Real user feedback is essential in improving your product and making it more appealing to your target audience. Ignoring or dismissing feedback can hinder the success of your side project.
Failure to Iterate and Improve
Continuous improvement is key to the success of any project. By iterating on your product based on user feedback and market trends, you can increase its value and profitability over time.
I hope this article has been helpful in highlighting some common reasons why side projects may not be making any money. If you found this information useful, consider implementing these strategies to enhance the success of your own side project.
By focusing on your users’ needs, sticking to a consistent tech stack, and avoiding distractions, you can increase the chances of your side project making money. Remember, the goal of your project should be to provide solutions to real-world problems, not to chase after the latest tech trends.
While subscriptions can offer benefits in terms of recurring revenue and business predictability, it’s essential to consider the impact they may have on user behavior and sales. One-time payments may attract more immediate sales, but they come with their own set of challenges in terms of pricing and user adoption. Finding the right balance between one-time payments and subscriptions is key to the success of your side project.
