Nathan Roach

Lawyer, Advisor, Investor, Entrepreneur.

Why people pay for webapps ... a customer perspective.

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                        </p><p>One of the thing that boggles me completely are people actually paying money for some dead simple applications. ... Are there not sufficient free open source tools to monitor your server and mail you when it goes down? Why would some of those big ticket customers ever pay for something like this? ...</p>

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<p>I was reading the original poster's question and left a quick comment, but I also felt like this was a question worth responding to more fully.  So I'm going to address it here. 

To me, the short answer is that pople can be enticed to pay for webapps when the app delivers value and solves a problem. Open source tools all too often solve a problem, but do so in a way that fails to deliver value.

One of the most exciting things about the "app" development model that's taking off in the mobile and web spaces is that it breaks down the barriers to entrepreneurship. Anyone with the skills to write some code and use that code to implement an idea can create an app. In some cases, this causes an explosion of competition that eventually settles down to a more natural oligopoly. But it also presents an opportunity for entrepreneurs to bring their unique value proposition to market and allow market forces to select which solution delivers more value.

Just because someone else has built an app in your space for free, or even if an open source product exists, does not mean that a paid app can't be a huge success. Apple didn't make the first smartphone. Blizzard's World of Warcraft wasn't the first MMO. But both turned out to be hugely profitable projects because the vision that was implemented created [b]value[/b].

One example from my personal workflow is Dropbox. I'm a paid subscriber to that service, which allows me to synchronize certain files between computers I own. I can also share those files with others. Dropbox isn't doing any magic that couldn't already be built from other solutions. They use Amazon's cloud (EBS I think) and a software client. You can build the same thing from open source tools like rsync, saving to an S3 or webdav instance. But the beauty of Dropbox is that you don't have to.

Where the great webapps deliver value isn't in the technical implementation, it's in the removal of barriers to entry for their customers. I signed up for dropbox because it took less than two minutes and solved an immediate problem. Sure, I could have built something on my own the following weekend in less than a day, but I had a need (synching a file) and wanted it solved immediately. I signed up for the free trial, and Dropbox did a sufficiently good job that I a) kept my account active and b) paid money for the upsell.

For certain customers, there's a difference between " I can do this myself " and "It's worth it for me to do this myself". Open source solutions usually fall into the first category. Paid apps allow customers to answer no to the second question. As long as customers are willing to hire you to solve their problem in less time than it would take them on their own, then you have a market.