It’s been said a million times before, a great idea without any plan for monetisation is a great idea for burning money and little else. I always cringe when I see new businesses started with no thought whatsoever towards eventual monetisation – it’s a part of the strategy that need to be baked in from the star (especially so because money is the lifeblood of business).

Interesting to read on their blog then that PickupPal has dropped it’s commission (formerly 7% of the transacted value of the trip). PickupPal puts a really nice “making the world a better place” spin on this, saying;

We have had such tremendous growth and are proud to be the largest Internet ride sharing company in the world. We feel that by removing this commission PickupPal will be able to grow even faster and become one of the world’s leading green-house gas emissions reducers

Well I guess they’re correct in one respect – paying for something IS a bit of a barrier to its widespread adoption (what would Google search use be if users had to pay for it I wonder?). I also know all the theories about building a userbase and then introducing charging at a later stage but this is a theory fraught with problems – it’s very easy to turn off a userbase used to a free service by all of a sudden charging them for the privilege.

Unfortunately the era of Google has changed peoples perceptions about what a service is “worth”. The amount of stuff out there that is accessible for “free” is so great that customers become a little incredulous at the very concept of paying for a service – regardless of the fact that without monetisation there is no long term viability for a business.

So what is the prognosis for PickupPal? Their idea is nice – trying to save the planet by facilitating ride-sharing – they claim that they’ve built a large userbase already so there is some potential for a partnership with or takeover by another organisation that already monetises (TreeHugger maybe?) – but to change tracks so markedly indicates an underlying issue around the business plan.

Watch this space!

Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

2 Comments
  • Unless they are selling carbon credits for the reduced transport use – like the lightbulbs-in-service-station guys were doing. No mention of it anywhere, and it sounded dodgy with the lightbulb guys, but if I thought of it then they might have as well.

  • Hi Ben,

    Thanks for covering our story and perhaps there are two sides to the story.

    We started off with a 7% commission to see how members would feel about paying for a service – not unlike eBay. Things have gone extremely well – we passed out yearly membership target in five months so we stood back and evaluated where we were at and what we could do to increase the number of members. What we found was happening was that the thought of any commission was a real barrier to entry for many people because the sheer mention of having to pay a commission changes peoples perception in a fraction of a second. It is in that decision point where they decide to sign up and use it or search for alternatives. There are other free alternatives that might not work as well as PickupPal but they are free and that is a tipping point for some.

    So when you are building a website you need to make the decision – do you want the most amount of people using it or do you want a sub-set of users making use of it. Also this is a different space than commerce – the fact that we were going to make money off of this endeavor was outrageous to some. Effectively making money off the back of the environment – Shame Shame! I can explain until I am blue in the face that sites like Treehugger.com survive because they have ads on their site so they are effectively making money off the environment – but somehow that is different – monetization off of ads is different. So in the era of everything is free we decided – why buck the trend and why not just go with it. We will be looking at putting some ads on the site in the third quarter or perhaps the first quarter of 09. We understand the metrics of our site and the volume of pageviews so we can generate enough revenue to sustain the site that way.

    Our goal is to get people to Rideshare and Carpool to save money and to cut down on CO2 emissions first and foremost – if we are successful at doing that we will be able to monetize the site via advertising – but you need to get people using it first.

    I agree watch this space – at any time check in with me and I will tell you how it is going.

    Cheers – Eric
    P.S. – I would take a look at are partners so far and perhaps you can see where we are going with all of this.
    (http://www.pickuppal.com/pup/erpinaction/partners.html)

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