[File under respected opposition] David Heinemeier Hansson, Jason Fried’s business partner at 37signals, begs to differ with the notion that Web companies shouldn't charge for their products. In a very entertaining speech (video below), he makes his case:
Forget using free to go mass and hope you'll become Facebook (or be bought by them). Instead, he says, focus on a small market and charge money. There are many ways to have a price in web software, he says, and he gives a few examples:
- Subscriptions (37Signals)
- Charge per use (Campaign Monitor email campaigns)
- Simply selling the software (Fogbugz)
- Flat fee for tiered service (Faxitnice)
He says that 37Signal's secret is not to target consumers (who don't like to pay) or big companies (that's a crowded space). Instead, they target the "Fortune 5 Million"--small companies with specific needs that are underserved (AKA the Long Tail).