Hey bootstrappers,

Knowing how to monetize your business isn’t easy. 

Recurring subscriptions, one-off purchases, pay-per-use, ads, or something else?

Get it wrong, and you risk alienating customers or giving away too much or too little. It could be the very thing that’s preventing your business from scaling. 

How do you diagnose a faulty pricing model?

Test different models like this week’s founders did. Try a limited run of lifetime memberships to raise capital. Offer per-service pricing to save small businesses money. 

Or, like one daring founder, give your product away to acquire half a million customers. 

The better you adapt your pricing model (or models) to customer behavior, the likelier they’ll buy from you and the happier they’ll be. And their success is your success.

Chris Roper

Managing Editor

How Do You Monetize Community? This Founder Struck Gold With Lifetime Subscriptions and Sponsorships

Fed built two successful businesses from entrepreneurs’ need to connect with online communities. But high churn meant he had to change his pricing model to survive.

Indie hacker Fed threw himself into entrepreneurship after graduation by developing a peer-to-peer recruitment app with friends. When that failed, he got a job as an engineer but quit six years in when he realized he spent more time managing people than building software.

While some people might enjoy a leadership role, Fed wanted to follow his passion for building bootstrapped startups. He compiled a list of bootstrapped communities and then wrote a script for searching Reddit threads, both of which he struggled to monetize despite happy users.

““At one point, I had thirty customers and one of them churned. I asked him why and the feedback was so valuable that it opened up fifty thousand dollars in revenue for me. He said, ‘I love your product, but I don’t need to use it every month. If you had a lifetime subscription, I’d go for it.’ So I said, ‘Why not?’” ”

Wins 👍

1. Building a helpful presence on Reddit. Fed managed to link to his businesses as answers to questions on Reddit threads by being helpful, not promotional.

2. Experimenting with monetization early. Today Fed monetizes his apps using a mix of recurring subscriptions and day passes to account for how different people use them.

3. Exploiting Facebook communities. Lifetime access communities on Facebook responded amazingly well to Fed’s limited offer, helping him raise capital quickly.

Challenges 🤔

1. The psychological impact of high churn. Several times Fed debated whether to quit building after seeing high churn but speaking to customers solved the problem.

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Want to Earn Revenue Fast? Just Chill on Product Businesses and Try Services Instead, Says Max

After formulating a tasty antidote to Red Bull called Just Chill, Max Baumann struggled to shift his drink in stores, so he built a service to help smaller companies like his sell more.

It took Max a year to get Just Chill on store shelves. Little did he realize his work had only begun. If he were to shift inventory, he’d need a legion of sales reps and merchandisers to optimize displays and do other tasks. But boots on the ground meant high expenses.

Max wasn’t the only one suffering the same dilemma. He met countless brands at trade shows all complaining of slow sales and the high cost of increasing them. Max figured that if he offered the same service but charged per store visit, it would be much cheaper than hiring full-time staff.

“That was the moment – between expanding into new states, burning capital, and hearing other entrepreneurs share that same problem – where Basemakers was born. How do we build a network of area sales managers to merchandise, sell, and provide services for several brands for a fraction of the cost?”

Wins 👍

1. Attending trade shows to understand his audience. Max tested the demand for his new business while networking with other brands to understand their pain points.

2. Offering a flexible pricing plan for small businesses. The per-visit pricing model made area sales managers affordable for small businesses, increasing referrals.

3. Selling Just Chill in 2018. Dividing his attention between two labor-intensive businesses slowed progress in each, so he sold one to fund the other.

Challenges 🤔

1. The pandemic almost destroyed his business. Basemakers relies on store footfall, so it lost thousands during the pandemic. It survived thanks to Max downsizing his staff.

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Can Late-Night Conversations Result in Successful Startups? Yes – Just Don’t Give Up On Them, Says Jake

Jake Aronskind and Matt Schkolnick spent their teens hashing out business ideas in a shed. After graduation, they put one of their hand-drawn plans to the test: social media for recipes.

Despite diverging careers, Jake and Matt never forgot those late-night brainstorming sessions in the garden. Jake returned to one of their ideas when the pandemic sent him home from his job as a trader and later invited Matt to join him. The result was Pepper the App.

A kind of Instagram for recipes, Jake and Matt had envisaged the app as user food pics with recipes. They tried to raise funding, but investors wanted to see a product first. With their parents’ and friends’ help, the cofounders raised just enough to build and launch an MVP.

“For the first week it felt like we had just opened up a store and wondered, ‘Why aren’t any new customers coming in?’ We realized that to get that snowball effect, you’ve got to roll your own snowball and push it yourself for a while. Getting Trader Joe’s people to start downloading it helped because there are so many Facebook groups for Trader Joe’s, with hundreds of thousands of people in it, to spread the word.”

Wins 👍

1. Enforcing ingredient uploads. Pepper relies on users to offer value, and requiring just one ingredient resulted in people usually uploading them all.

2. Collaborating with influencers for the App Store launch. The influencers showcased Pepper when saving and sharing recipes with their audiences, boosting downloads.

3. Partnering with Instacart. Now customers can buy ingredients in people’s posts in a single click through Instacart.

Challenges 🤔

1. Bugs on launch day. The follow button broke. Uploads failed. The trademark was late. All problems that the founders believe were behind the poor signup rate at launch.

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