KludgeCode

is Ben Rudgers

Ask HN: What service would you pay $10,000 per month for?

[Written in response to similar $5, $10, and $50 threads.]

What service would you pay $10,000 per month for?

This is the real question that a successful SAS subscription based company like 37 Signals seeks to answer.

A service which scales needs to focus on the needs of groups, not the stated desires of a series of individuals. The consumer space does not lend itself to the SAS subscription model because the value proposition won’t be attractive to enough people to create strong network effects – unless it’s “free” like hotmail, Google+, or MySpace.

37 Signals’ value proposition is not based upon individual convenience but enhancing the customer’s bottom line via network effects. Their basic revenue formula is > $1.00 per user per month. It works for them due to economies of scale. It works for their customers for the same reason.

What makes it work is that the customer pays to have control. 37 Signals doesn’t suggest chatrooms to join. Customers bring their networks with them, they expand organically based on the customer’s actual business operations rather than in order to squash an annoying pop-up.

Freemium or premium. Leave $5 footlongs to Subway.