Don't hit the brakes too soon

Charging for a new online service can slow down the activity you’re building. In this 2011 video, I talk about a mistake I felt I’d made with Amino Freelancer.

Charging for a new online service needs to fit its stage

A service like Amino Freelancer needs both freelancers and businesses with jobs. Freelancers need to find work, and businesses need to get their jobs done.

I’d spent a long time getting it going. When activity began picking up, I became focused on how we could make money from it too.

At the time, an important source of income was Amino Plus. We considered benefits that could persuade both freelancers and businesses to choose a membership.

I put the brakes on job listings

Businesses that weren’t Plus members had to wait longer for their jobs to go online. I thought paying to get ahead more quickly was reasonable.

But I overlooked how important the flow of jobs was. Where there was work, freelancers would come. Having freelancers wasn’t in itself enough to make businesses post jobs.

I compare it to getting a train moving. It had just gained a little speed, and then I put the brakes on. I felt I’d done it too soon.

Build value before tightening things up

My experience was that the service needed time to become useful and establish steady activity. Then changing the terms and charging for extra value might be easier later.

That doesn’t mean everything should always be free. Development and running costs need paying. But the timing and which side of the market you choose to charge can make a big difference.

The video describes my thoughts about Amino Freelancer in 2011 and the terms we used back then.

Remember to create your free Amino Bizz profile – Click here

Charging for a new online service: My mistake with Amino Freelancer

I’ve got a cold and a bit of a fever when I record the video in June 2011. I look like shit, but that’s not why you should listen to me anyway. I’ve been thinking about a mistake I’ve made with Amino Freelancer.

That service is a bit of a baby of mine. Perhaps you’re not supposed to say that, but I’m enormously fond of it and spend an unbelievable amount of time on it. It’s taken about two years to get it properly going. Now I finally feel I’m getting there.

Then I also start looking back at what I’ve done wrong. There are plenty of things. I’ve previously talked about putting too many features into a service, and I won’t repeat that here. This time, it’s about when you start making money from the activity you’ve created.

First, both sides need to benefit

When you build an online service, you first have to create the solution itself. Then you need users and things need to get going. People need to start trading, meeting, uploading pictures or doing whatever the service was built for.

On Amino Freelancer, that means bringing in lots of freelancers. But you also need businesses posting jobs. Freelancers need work and money, and businesses need their jobs done. Then it needs to work better and better.

In the middle of all that, of course I’m thinking about how we can make money. A central way for us at Amino is selling Amino Plus subscriptions. Freelancer is one of the services that brings us the most of those.

At the time, membership costs DKK 99 a month. That’s small change for an individual freelancer, I think. But once we have enough members, it starts adding up to a decent income for us.

Once you’ve provided something for free, there needs to be a reason for people to pay. Perhaps you can take a little away from the free version, as long as it isn’t too much, and add something extra. The next question is who should pay.

I wanted both freelancers and businesses to pay

Should it be the freelancers or the businesses offering jobs? I thought perhaps I could get both sides to pay.

My idea was that a business with Plus membership could have its job posted almost immediately. Others might have to wait 48 hours, for example. Freelancers, in turn, could pay for the chance to bid on more than one job a week.

But I overlooked an important difference between the two sides. Where the jobs are, the freelancers will come. Where the freelancers are, businesses don’t necessarily have to come. Businesses have other ways to get the work done.

When we started getting five, six, seven or eight jobs a day, I thought things were going really well. Then I introduced precisely that rule where a business had to wait 48 hours to have its job posted if it didn’t pay.

I became greedy and full of myself. I thought businesses couldn’t do without this. They could wait if they didn’t have fucking DKK 99. I could make an argument that it was fair. But that argument wasn’t what mattered.

It doesn’t help that you think it’s fair

Fair means nothing in business if people don’t do what you expect. The question is whether they actually choose to use and pay for the service. You can put the fact that it was fair on your gravestone.

I’d put an obstacle right where the jobs were supposed to come from. And the jobs were what brought the freelancers in. My mistake was applying that brake before the service had enough momentum. You’ll find more of my experiences building businesses in Iværksætter til jeg dør.

I compare it to pushing a train into motion. It’s slow at first. Then you gain a bit more speed and a little more activity. When you start charging or introduce a restriction, it can slow the train down.

I simply did it too early. I should have waited until things were busier. I’ve made that mistake a few times in different ways, and this time I hope it can be the last.

Build momentum before changing the terms

My lesson is to be careful with the timing. Don’t apply the brakes while the train is only just picking up speed. Wait until it’s really flying, with the wheels screaming and the train vibrating from the speed.

Then it’s easier to start slowing it down a little, gradually. There’s enough activity for the change to have a positive effect on revenue relatively quickly. And the service can better withstand a drop in activity.

If you’re doing 400 kilometres an hour and fall to 360, that doesn’t matter much in my analogy. But if you’ve only reached 30 and drop back to 10, you can actually kill the service.

Give things time to get properly going. Wait until you’re providing so much value, have so many good things to offer, happy users and lots of visits that you can start adjusting the model a little.

It’s fair enough to charge. Everything costs money. There’ll also be people complaining almost whatever you do. But my own experience here is that I shouldn’t have been so greedy at the start. First, I should have given the service more time to work and gain momentum.

Best wishes, Martin