The problem, everyone seems to think Reddit doesn't provide enough value to be worth $5 a month to enjoy without ads and a nice UI.
Reddit wants about $0.024 an API request. To think that isn't reasonable, seems odd. Sendgrid wants $0.0399 per email. ScrapingBee wants $0.098 an API request. Docraptor wants $0.4 an API request/pdf. I'm sure I could carry on and find more and more sites that cost more per API request, I didn't find one that was cheaper.
$10/month to use a free website on your phone is just not a very attractive deal at the end of the day.
$2.50 would be the API costs per user. So $5 would cover, take in some money and pay appstore feeds. And if you're looking at 10% of his userbase, that would be about 4 million a month income with 2 million being for Reddit. Based off his claims of 20 million a month with a $2.50 cost per user.
I'm sure he'll be able to survive off $1,000,000 a month profit.
Edit corrected the numbers:
$2.50 a user for API costs.
$5.00 a month subscription would cover that cost.
$1.50 going to AppleTax.
$1.00 a user to the indie hacker
If 5% of users that would cost $20MM sign up for $5 a month it would be $2,000,000 a month overall revenue.
$1,000,000 to Reddit.
$600,000 to AppleTax
$400,000 a month to the indie hacker.
And there is also probably a part of him that doesn't want to be greedy. But is it greedy to sell your software for $5 a month? I don't think so.
Dang, maybe there’s room to make a Reddit app, haha.
He says that he can charge more and still make a living. However, the price change goes into effect July 1st of this year. That’s less than 30 days from now.
The issue is all the current premium users who have 2-12mo left on their subscription suddenly become a huge liability. He cannot suddenly ask for more (against apple rules), and he must not remove features they paid for (apple will issue a refund to them).
It's a spectacularly stupid move, almost on a par with Musk >50% of Twitter's value and Waves trying to force their customers onto a subscription model by making old versions obsolete.
Reddit will lose a huge number of users, its brand will be trashed, and the app companies will be forced out of business.
There is no way this can't end up as a net loss.
I've cancelled my subscription.
Reddit will lose a bunch of deadbeat users, who generate little to no income for the company but cost money to serve. In business, these are the sort of people you don't want.
Who do you think will spend hundreds of millions a year to replace Reddit so that deadbeat users can use it? There would be no money in serving those users and any attempt to serve them and monetize later will result in the same thing that is happening at Reddit. The days of VCs burning money for social networks seems to be over.
I would suspect Reddit has done the maths. And saw that most content generators use their app or the website to post.
And every big decision they've made has made it worse, not better. Do you use new reddit?
He did. Apollo has a freemium model, and if the API pricing was reasonable, he coult take the hit using the subscribers to subsidize the free users. The problem is the exhorbitant pricing, meaning all his users should be paying four times what the usual suscription costs, just to pay Reddit. It's bonkers.