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Pot of Gold Originally uploaded by tao_zhyn “I’ve got lots of users, I’m going to start making lots of money soon!” I hear a lot of new businesses talk about how much money they will make when they get big through advertising but I’m not sure they realise just how big you have to get before you make any serious money. This is really true of SocApps (Social Network Apps) which promise fast and big acquisition and lots of page views. I’m working on a calculator for this but in the meantime here is the quick ‘back to earth’ maths. Update: I finished it. Well, the Pollenizer developers finished it. Web Business Revenue Calculator Customers = 10,000 x Visits per month = 4 x Pages per visit = 3 x Ads per page = 2 x Effective Nett Revenue Per 1,000 ad views (ECPM) = $0.80 = $192 a month! Buy that BMW now! $192 won’t pay for your servers…. The divide by 1,000 in the ECPM is the killer. 80 cents per 1,000 ads. Sheesh. Don’t not go for it, but just realised that big needs to be BIG to get a good return.
Credits as business modelOriginally uploaded by bigmick I remember lots of startups in web 1.0 that tried making web credits a business. I saw today that it’s Jib Jab’s way. They give you 50 credits, charge 30 credits per send, so the next one you want to send, you have to fork out the bucks. My reaction…. “Umm, well, I don’t really love them that much…” It’s the challenge premium services face. What’s the real marginal utility. Now if I can buy 3,000 credits for $10, then I’d be sending them off like popcorn, but I didn’t even bother to look at the price. I just sent it and thought I’d never come back. Second Life use a form of credits to monetize and that works quite well, but it’s a part of the ecosystem a bit more. Jib Jab feels like it should be free. Anyone else doing credits well? P.S. I hurt my foot playing basketball tonight and I’m shitty about it. Hope its not too swollen in the morning.
So I’m exactly double what Google promised me early on with Gmail. 1,000 MB offer and I’ve shot past. But they haven’t even bugged me for money. In fact, they have said that I can triple from now and still be ok. And by then it might be 10 gig. Nuts? I’m sure the business guys out there are thinking that they are crazy for not charging. “Even if only 1% of people pay, that’s a few million bucks a year!!” But decisions about web apps are not so simple. You’re not just saying yes to 1% and a few million. You are also saying no to somethings too. You are saying; “NO” – to the innovators who recommend Gmail to their friends. “NO” – to people (like me) who use Gmail as a platform. “NO” – to 5 billion CPC impressions which would make $2 ECPM, coming out at $10M per year (Mickstimate) Plus, the cost of administering the payments…. etc, etc. So it’s never as simple as make money or not make money.