If your cost per user is less than the incremental revenue each user brings you, it doesn't matter how little those users cost: You're still following the "we'll make it up on volume" battle cry in the wrong direction.
Bandwidth and server costs are still costs. Whether you split those costs among four customers or four million, you still need to recoup them and show a profit to create a sustainable business.
Re:How Are We Going To Make Money?
by losslessignal on Friday March 28, 2008 @01:51PM
(#148696)
If you don't have any secondary costs this is true.
A lot of web companies still need to "pay the rent" or other variable costs. Even without that, don't forget that revenue gives you a huge leg up when searching for funding.
As another user said, the companies listed so far failed for auxiliary reasons. One of them to be wary of is overexpanding, which is basically what Webvan did. The trick is to not do a massive land-grab unless you absolutely have to; Read this- http://www.joelonsoftware.com/articles/fog0000000056.html