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I run a community site, with a lot of loyal long term users (most users check the site about 10 times a day and have been registered for years). My AWS bill is

I run a community site, with a lot of loyal long term users (most users check the site about 10 times a day and have been registered for years). My AWS bill is 15k per year, and the site earns 70k a year from a couple of advertisements. Now, I also give users the option to pay per month to remove advertising and receive a number of additional perks for fun. However, only 100 of the 100k active users decide to do so, and that only brings in 5k a year in earnings. In short, 15k in expenses, 70k from advertising, and 5k from users willing to pay money. So, if advertising fails I go from a 60k profit to a 10k loss per year, and the site would quickly close.

dsacco 9y ago
Cool, thanks for sharing concrete numbers for the discussion!
- Guest9812398 9y ago
  No problem. I actually spent a couple of months working on the system for user payments. I had a number of discussions with the community and received thousands of comments with feedback and suggestions for what they wanted to see. I took everything into consideration, included the extra perks that people suggested, and made the payments work seamlessly with the site. The system is also advertised well throughout the community. I'm saying this because I want people to know I gave the option a fair chance, and this isn't a random PayPal link I tucked into an obscure location.
thomasz 9y ago
They pay one way or the other. The ad campaign cost is factored into the consumer price. In my eyes, this all comes down to convenience. If there would be a way to automatically deduct the small price for an impression from my account every time I visit a site, I would totally do that in order to avoid ads, crappy js, malware and all that shit. I don't even think it would cost that much.
igravious 9y ago
Uh? _Only_ 5k a year in earnings? 100 users out of 100k is .1% (a ratio of 1,000) If the other 99.9% of your users paid the same rate that'd be 5k x 1,000 = 5 million which is _way_ out of whack with what your advertisers think your site is worth which is 70k. You're overcharging your users by a substantial amount (a factor of approx 72 if my calculations are correct) so it's unsurprising only .1% have opened their wallets. The other 99.9% don't want to be fleeced by you.
- Guest9812398 9y ago
  There are a few things you need to keep in mind. Users that are willing to pay are typically from higher paying advertising regions, because those are areas where people have higher income. Therefore, I might generate $1 a year per user in advertising, but the average region where people are willing to pay is generating $3 per year. That changes your calculation to a 24x increase. Ok, then you need to realize only the most active users typically want to open their wallets. The users visiting 20x a day are going to pay before the people that visit a few times a week. So, if a paying user is typically 3x more active than a non-paying users, they're generating more advertising income. That changes your calculation to an 8x increase. Now, I should inform you users have 3 different payment options. All options remove advertising, but some users pay more because they want to support the site. So, users can actually pay 50% less than the average numbers I shared in the previous message, and still have advertising removed. That changes your calculation to a 4x increase. Ok, this is now looking more accurate, and I would agree the average user is probably paying 4x more than I earn from them in advertising. This is done on purpose to optimize earnings. If I lower payments by 4x so they're close to advertising rates, I'm not going to have 4x as many users sign-up. Even a 1 cent payment option will scare away 95% of people. So, yes, I'm charging people more than they generate from advertising. If I charge them the same amount, then I would very likely have 150 instead of 100 paying users and see lower earnings. This doesn't influence my original message, and how advertising is the most important source of revenue for many sites. Without advertising there is no way I could cover my 15k in expenses, and no amount of fine tuning to my user payment system would get me to those numbers.
  - igravious 9y ago
andrewaylett 9y ago
That's really interesting. But it seems like you're getting a lot _more_ money per-capita from the users who pay with money than the users who pay by looking at adverts. I might be able to match an advertiser's bid, but I definitely can't afford a full-fat subscription to every site I frequent. Although it does sound very much like your site is more compelling for its community than most.

dsacco 9y ago

Cool, thanks for sharing concrete numbers for the discussion!

Guest9812398 9y ago
No problem. I actually spent a couple of months working on the system for user payments. I had a number of discussions with the community and received thousands of comments with feedback and suggestions for what they wanted to see. I took everything into consideration, included the extra perks that people suggested, and made the payments work seamlessly with the site. The system is also advertised well throughout the community. I'm saying this because I want people to know I gave the option a fair chance, and this isn't a random PayPal link I tucked into an obscure location.

thomasz 9y ago

They pay one way or the other. The ad campaign cost is factored into the consumer price. In my eyes, this all comes down to convenience. If there would be a way to automatically deduct the small price for an impression from my account every time I visit a site, I would totally do that in order to avoid ads, crappy js, malware and all that shit. I don't even think it would cost that much.

igravious 9y ago

Uh? _Only_ 5k a year in earnings? 100 users out of 100k is .1% (a ratio of 1,000) If the other 99.9% of your users paid the same rate that'd be 5k x 1,000 = 5 million which is _way_ out of whack with what your advertisers think your site is worth which is 70k. You're overcharging your users by a substantial amount (a factor of approx 72 if my calculations are correct) so it's unsurprising only .1% have opened their wallets. The other 99.9% don't want to be fleeced by you.

Guest9812398 9y ago
There are a few things you need to keep in mind. Users that are willing to pay are typically from higher paying advertising regions, because those are areas where people have higher income. Therefore, I might generate $1 a year per user in advertising, but the average region where people are willing to pay is generating $3 per year. That changes your calculation to a 24x increase. Ok, then you need to realize only the most active users typically want to open their wallets. The users visiting 20x a day are going to pay before the people that visit a few times a week. So, if a paying user is typically 3x more active than a non-paying users, they're generating more advertising income. That changes your calculation to an 8x increase. Now, I should inform you users have 3 different payment options. All options remove advertising, but some users pay more because they want to support the site. So, users can actually pay 50% less than the average numbers I shared in the previous message, and still have advertising removed. That changes your calculation to a 4x increase. Ok, this is now looking more accurate, and I would agree the average user is probably paying 4x more than I earn from them in advertising. This is done on purpose to optimize earnings. If I lower payments by 4x so they're close to advertising rates, I'm not going to have 4x as many users sign-up. Even a 1 cent payment option will scare away 95% of people. So, yes, I'm charging people more than they generate from advertising. If I charge them the same amount, then I would very likely have 150 instead of 100 paying users and see lower earnings. This doesn't influence my original message, and how advertising is the most important source of revenue for many sites. Without advertising there is no way I could cover my 15k in expenses, and no amount of fine tuning to my user payment system would get me to those numbers.
- igravious 9y ago

andrewaylett 9y ago

That's really interesting. But it seems like you're getting a lot _more_ money per-capita from the users who pay with money than the users who pay by looking at adverts. I might be able to match an advertiser's bid, but I definitely can't afford a full-fat subscription to every site I frequent. Although it does sound very much like your site is more compelling for its community than most.