DaVinci Posted January 2, 2014 Posted January 2, 2014 I'm curious to hear some personal stories of the donation based model being lucrative. Not just sufficient, as in barely paying bills and scraping by, but actually lucrative. I'm thinking about using the donation based model for a project I am working on right now, but I see a lot of cases where people pour their heart and soul into a product and any money they receive is not nearly enough to justify the amount of work they do. So does anyone have any personal stories of success with this model? Are there certain methods that work better than others? I'm sure someone has been successful with this model, and success must be leaving clues behind to pick up on. Any thoughts on this topic would be great.
Sumeet Posted January 6, 2014 Posted January 6, 2014 I can't say I have any personal stories on this topic, but I had a few thoughts upon reading your post. When you say "I see a lot of cases where people pour their heart and soul into a product and any money they receive is not nearly enough to justify the amount of work they do", I agree, and I think this is very logical. The amount of money you make from a product or service is not going to be relative to the amount of work you put into it, it's going to be based on how much value it has to your prospective customers. There have been products which took very little effort or money to create that have made huge profits, and others which took huge investments in research and development, and went on to make no profit, and lost huge amounts of money for everyone involved. This is the paradigm no matter what your distribution model is... retail, donations, paid subscriptions, or anything else. If your project is something you hope to make money on, then I suppose you have to weigh how much time / effort / money you're going to spend on the project vs what you can realistically expect to gain in donations (over a timeframe that works for you). Also, when deciding on a distribution model, it may be worthwhile to fully examine your own intentions... is this a project that you are going to do no matter what, even if you don't expect to profit, or is it something you only intend to move forward with if you have a reasonable expectation of profit? One other issue this brings up... Stefan, for example, has clearly used the donation model successfully with his shows, videos, and podcasts. But in his case, there are certain other motives as well... for example, he likely wants to get his message out even to people who can't afford to pay anything. If those people change their lives based on information he provides, or expose others to it, then something will have been gained even if no monetary donation results. If your project involves a service or a physical product, as opposed to digitally-distributed content, you may have to do a somewhat different analysis of whether the donation model is the correct model for your project. For example, maybe something like crowdfunding may be the way to go, because if you don't have a good estimate from the start as to how much of a return you can expect on your investment, the crowdfunding model gives you at least some idea right up front about what you may stand to make in the short-term, before you even start working on your project and investing your resources into it. Anyway, just some thoughts... I hope a few were useful. I wish you the best with your project no matter how you decide to finance it!
PatrickC Posted January 6, 2014 Posted January 6, 2014 Ad Block are a donation based business and they call it their 'Honor system'. The developers are deeply involved with their donators views and opinions and are extremely customer focused. https://getadblock.com/pay/ Wikipedia of course. Although, they do have some commercial products that are mostly ad based. On an aside, I now understand better why Stefan avoids advertising. The kind of focus you get from Ad Block as a donator compared to say Facebook, is a whole different experience and much more focused on the end users needs.
the Architect Posted January 31, 2014 Posted January 31, 2014 I have not had a huge amount of success using crowd funding but I am still developing the temporal reserve, and have paid for all the equipment I have now for printing the first bill, and shipping a number of them out to people, all over the world using it. I would offer though that your value of product to the customer, is not the only thing that is important here, also there is your ability to get your product in-front of peoples eyes and get their attention long enough to see what it is you are offering. Then how you introduce it, so as not to insult peoples intelligence, while still being able to be understood by the majority of the populace, is going to be equally important...
aeonicentity Posted February 7, 2014 Posted February 7, 2014 Heart and soul are poor indicators of the value of a product. Be careful about projects that require a lot of time but only serve a small fraction of people. Generally speaking, your target audience matters a lot too: Kids don't pay for anything. Parents might pay for something, but usually if its for themselves. They may not pay for it if its marketed towards their kids. Its nothing personal, but they're trying to get little timmy to shut up, not spend an extra $10. Businesses are VERY likely to pay for a donation-based thing. If you offer it for free, and ask kindly for $10, they'll throw a bone your way happily. These are the only demographics im personally familiar with. For example, I don't know how likely women are to donate over men, or what age demographic is the best. I would suggest investing as much market research into any product you offer for free as you would any product you'd require payment for. If no one will pay for it, even if payment was required, don't bother.
Recommended Posts