Does anyone have experience using a donation model on a for-profit business?

boatBurner

boatBurner

shutup, crime!
Feb 24, 2012
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I'm working on a side project with a user base that is pretty vocal about their disdain for ads (see: Reddit), and since this product is B2C, I've decided not to charge a subscription fee.

Instead, I'm considering going with a donation model. Has anyone had successes or failures with this, and if so, care to share those metrics?
 


you're advertising an anti-advertisement product to redditors. u wot? u even advertise m8?
 
gbmack said:
you're advertising an anti-advertisement product to redditors. u wot? u even advertise m8?
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To clarify, the demo I'm after doesn't like ads, so I'm not going to include adverts as part of the monetization strategy.
 
You need to actively beg for it. And get a bandwagon effect going like reddit has the progress bar ever day for reddit gold.

We offer you X amount of value totally free cause we're dope.
We need Y dollars per month / year for A,B,C because so many people like how dope we are.
Can you help us reach our goal of Z?

You want to see some really well practiced fundraising look here: http://antiwar.com/.

They routinely raise high $xx,xxx every quarter.
 
Freemium

Make it no cost to get started and charge monthly (or OTC) for the high end parts of your SAAS. 37 signals has lots of good things to say about this business model.
 
erect said:
Freemium

Make it no cost to get started and charge monthly for the high end parts of your SAAS. 37 signals has lots of good things to say about this business model.
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It's worth noting that the industry this application services is PC gaming.

There's a few gamification techniques I'll be using to build into the donation model, but I'm nervous about a freemium model because of the parallels it would have to the in-game microtransactions model, something that seems to be doing well for many games but generates a lot of negative criticism.
 
boatBurner said:
It's worth noting that the industry this application services is PC gaming.

There's a few gamification techniques I'll be using to build into the donation model, but I'm nervous about a freemium model because of the parallels it would have to the in-game microtransactions model, something that seems to be doing well for many games but generates a lot of negative criticism.
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You just need to play the little guy card and let the user feel like they're supporting something worthwhile and at the same time fighting those big bad corporations.

GGG Plague Inc. tells you why you have to pay for dlc. : gaming

I think people save their disdain for big players like King.com, not the little guy.

http://www.reddit.com/r/gaming/comments/1xq1k6/candyswipe_open_letter_to_king_candy_crush/

These stories are hot, viral, well seen. Let your users (who probably see these reddit posts) feel like they're supporting something before it's cool.
 
I think you need to decide first if people are going to pay for it with a micro-payment or freemium version and if they're going to click ads.

You might think that your user base will object heavily to it, but you're running a business and the consumer will always want something for free, but will eventually pay for it if they want it enough.

I really doubt donation is the way to go. I've donated a couple of times to worthy causes, but overall I've paid for a lot more products even those that weren't as good as those I donated to.
 
rusvik said:
I think you need to decide first if people are going to pay for it with a micro-payment or freemium version and if they're going to click ads.

You might think that your user base will object heavily to it, but you're running a business and the consumer will always want something for free, but will eventually pay for it if they want it enough.

I really doubt donation is the way to go. I've donated a couple of times to worthy causes, but overall I've paid for a lot more products even those that weren't as good as those I donated to.
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I'm making huge assumptions when I say that gaming communities are becoming trained donors. But with services like Twitch and the overall groupthink of gamers, I believe there's some truth to that, enough to test it.

The main reason I think the userbase will object to it is because a very small pool of them (~200) have confirmed it. I'm trying to be as accessible and responsive to the users during development, and outside of feature requests, they've expressed their hate for ads.

There's a chance I could try to charge them a subscription fee, but I have a feeling that wouldn't work out very well, especially out of the gate. This app is two-party and if it has any chance at succeeding, I think it needs to be as accessible as possible from the beginning.

Lastly, this product is not a game but a third-party application adding a non-existing feature to an existing game and its community of players.
 
I don't think you'll find any group who will not say they hate ads. I hate ads too. No one will ever say they don't mind ads.

You ask them if they want ads, then they say they don't want ads, then you ask them if they would pay for it, but they don't want to pay for it.

I am no expert on setting the price for something and the freemium/donation models but just saying that everyone will say they don't like or want ads. Still doesn't mean they won't use your product with ads in them.
 
rusvik said:
Still doesn't mean they won't use your product with ads in them.
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I definitely agree with you there. And to clarify, I've never asked them, they've just offered the feedback regarding ads. So while I think I could get away with ads, I'm simply exploring whether or not I can make more from social good than I could with ads or ads + social good.

I'm not going the freemium route. I will probably kill the product before I try to introduce that. It's just not right for this product.
 
boatBurner said:
I'm working on a side project with a user base that is pretty vocal about their disdain for ads (see: Reddit), and since this product is B2C, I've decided not to charge a subscription fee.

Instead, I'm considering going with a donation model. Has anyone had successes or failures with this, and if so, care to share those metrics?
Click to expand...

One of my business partners tried this a few years back.

You will have to battle "donation blindness". If they see it regularly, they will tune it out. I told him to try two approaches (his was a free SaaS web based product, so adapt to your scenario):

1. Change how you're asking for donation (in his case, he switched it from bottom to the top of the product, and added an ugly handwritten note). Change the whole pitch once in a while. Remember, you are begging. You need to catch their attention.
Being funny works. Being anti-corporation works.
Did you get a C&D from a big corporation? Make sure to let them know. They will help you in anyway, as long as you're standing up for the little guy.

2. Once in a while, usually when you get desperate, try an intense donation campaign ("My servers are about to be shut down because of traffic spike and I need your help - will you help me?").

For him, the second approach with a specific amount mentioned ("need to raise $xx,xxx urgently to avoid _____") worked better.

General thought (for this demographics): More text, less graphics. Ugly works.

Final note: Be honest, as much as you can. It pays, in the long run.

YMMV. Ping me if you need any more information.
 
A blog I used to subscribe to Stevepavlina.com/blog switched from adsense other contextual ads to a "recommended product" format at some point. Basically ads but for products that he'd used along with a personal story of his experience with the product

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