I having been thinking a lot about how to monetize web applications lately as I doing some work in that area. And I found that it’s one of the things I personally struggle with. Getting that part of the plan done is, for me, a tough job.
It’s all free baby!
Giving your web application away for free might not making you a lot of money from users but it will give you a better chance of building a huge audience and then making money through advertising. This will be the obvious choice of social web applications and content rich sites.
Pro memberships
The flickr model - giving limited access for free and giving the users the option of buying access to new, useful features for a small fee ($24.99 on flickr).
This has the advantage of making your site accessible to everyone while still making money directly from you power users. The trick with this one is to give enough away for free to get members and still bringing enough extra to the table for your pro members.
Everybody pays!
A lot of new wordpress plugins/themes are trying this approach to making money. If you are confident that your web application is really making somebody’s day easier this can be the best choice for you.
Now this is actually a reminder to myself. Most of this is pretty obvious but I always forget to think about it before I start up new projects.
You mentioned social web apps. What is your opinion on the “chicken or the egg first” issue? How do you draw people to your site to achieve that critical mass?
It’s always tricky to get people to a social site. A this point in the social apps game it’s in my opinion crucial to stand out - and it’s hard to do. I would be sure that my idea was as unique as possible before even trying to get into the space of social apps.