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Lead Your Team Strategy

From Free to Fee: How to Break the News to Customers

From Free to Fee: How to Break the News to Customers

It’s the conundrum of every online entrepreneur. If you launch a website with appealing features that can be accessed for free, you’re more likely to attract an audience. But once those free users start to multiply, your operating costs do, too.

Start charging, and you risk business suicide. Stay free, and you could be the poorest successful entrepreneur there is.  Advertising revenue is the typical solution, but what if your site is geared toward a market riddled with advertising regulations and ethical dilemmas?

That’s the unenviable situation Jim Robinson and Kurt Dommermuth, the founders of KneeBouncers, faced. Founded in 2002, their site is an animated gaming destination for children. Thanks to its entertainment and educational value (both offered free), it’s been recognized in numerous parenting blogs and in Parenting magazine. Special education teachers and parents of autistic children have applauded KneeBouncers for its appeal and accessibility for kids with unique challenges.

In lieu of advertising, the founders recently made the decision to begin charging a $19.95 annual subscription fee for use of the site. While some parents wholeheartedly supported the decision, others were not pleased. Co-creator Jim Robinson told BusinessNewsDaily about the story behind moving from free to fee, and what’s next for KneeBouncers.

BusinessNewsDaily: How did KneeBouncers begin and how did it catch on so quickly?

Jim Robinson: We created KneeBouncers for our own kids and extended family. It was quickly passed between different moms groups and written about on mommy blogs. We have never advertised for the site; we have relied on word of mouth to spread the news about KneeBouncers. Within a year of launching we were getting notes from parents from all over the world.

BND: Did you consider costs that would be associated with the site when you launched it as free? How long was it free.

J.R.: Until recently, we never really considered the costs. For seven years, we created the games as a side job for our kids and enjoyed sharing the site with the world. As the audience grew so did the demands on our time and resources. Upgrading to a better server that could handle the growing audience, more educational games, working with early education experts, music, animation, programming. There is a lot that goes into these simple games and it starts to add up.

BND: What prompted the business decision to move toward a fee service?

J.R.: We love making the games for KneeBouncers. We have a lot of ideas and fun planned for the site. We can't get there by doing the work as a side job anymore. We want to create for KneeBouncers full time. To do that, and to keep the site advertising-free, membership is our best option.

BND: How were customers informed of the change?

J.R.: About three weeks prior to the switch we posted an announcement (a letter from Kurt and myself) on the site as an overlay right when the site came up.

BND: You offer paid advertising for a "modest fee" on the blog side. Why not make the whole site funded by advertising on the parent side of the site?

J.R.: We just started the blog this year and while traffic is growing, we aren't getting the numbers we get on the kids' site.

BND: Any consideration given to charging a fee for “premium” services but keeping the basics free?

J.R.: We considered a lot of different models and we still offer a few games for free. As we create more new content, we may be offering more games for free. We are also looking into a sponsorship-driven free game side of the site.

BND: How did you arrive at the value of $19.95 a year?

J.R.: We studied other pay-for-play sites, the more popular ones like Club Penguin and Poptropica, keeping in mind that they are targeted at older children and their appeal is more of the social aspect. Their memberships charge upwards to almost $60 per year. We came up with a couple of different pricing options and asked a selected number of parents through our Facebook fan page. The $19.95 price point, which comes out to 5 cents per day — or about $1.65 per month, tested to be the easiest for families to work into their yearly budget.

BND: Do you think consumers would have reacted any differently if the service were offered at a month-by-month basis of $1.65, versus a flat rate of $19.95?

J.R.: I think going from free to any price is a big jump for some people. I think we would have heard negative comments if we offered membership for a dollar. This is another area we are looking at — and down the road perhaps offering a three- or six-month membership.

BND: In hindsight, do you regret not just charging a fee upfront for the service?

J.R.: No. We built a nice following by offering KneeBouncers to the world for free. And by building the audience to a certain size, we were then able to make the move to membership and retain a solid core base.

BND: Do you think this fee to free "controversy" has hurt or helped the KneeBouncers brand?

J.R.: I think it has helped. It has shown how passionate people are about their love for KneeBouncers. Even the people who are mad are writing and saying that they and their kids "love the games" and that they "have spent countless hours playing and laughing and learning." No one is saying that it isn't worth it; they are just saying they want it for free.