The first concept for the website - an almost oops

I mentioned in the first post how we came up with the idea of Chasing Savings... well, let me go into more detail about the initial thoughts and ideas. The original concept was to promote "trading coupons" and the site was going to be called "Trade-a-Coupon"... Personally, I thought it was a great idea and everyone I pitched the concept to thought it was a good/great idea... that is until we started looking at different models of revenue generation... such as setting ad rate fees for vendors - whether they were purchasing space for coupons or banner ads, straight banner ad sales, Ad Sense, and Affiliate programs... I know you just went huh? So let me explain.

The original concept of the site, was to allow for coupon trading. There would be two types of users - Standard (aka Free Membership) and Gold (aka Paid Membership). Standard membership would have very basic search capabilities and be required to trade (aka upload) a 1 to 1 coupon ratio... in other words, for every coupon the Standard Member would download they would have to upload one... While the Gold Member would not have the same ratio - something like 5 downloads to 1 upload, they would also get access to other tools like a savings calculator, newsletters, twitter alerts, and the list goes on. The overall concept at this point wasn't too bad... If people would purchase a $5 a month membership, AND we had a membership equal to our competitors - example, most coupon sites after the first year have between 100,000 and 500,000 members, there are three sites that are more than 2 years old that have 1,000,000 to 2,000,000 members. The first problem with this solution would be if everyone became gold, then the site would face not having coupons. With this primary model, if we hit a 50% ratio between paid and full and hit the 100,000 mark, then we would see yearly revenues of $3M... Not bad for a start-up in its first year. However, we would be dependent upon Standard Members being loyal to our site enough to constantly upload coupons. Administratively, it would also be a head ache because ever upload would have to be checked by administration before publishing. Then the question came into play, why would someone pay to be a member of a coupon site, especially if the competitors were offering Free Membership... Hmmm.. As we continued to look at the revenue models of the site, we thought about selling space on the site to vendors to upload the coupons... now here is the BIG GOTCHA! Why on earth would any vendor PAY to upload a coupon to a site, when they could create a Standard User Account and upload as many as they wanted! - As Homer Simpson would say "D'oH!

I still think it is a great concept but there are too many "ifs" and to many holes in the potential revenue to become a working business.

So today the Chasing Savings business model, is free membership for all users of the site - revenue will be directly generated from ad space on the site - banners, and coupons from vendors. We are still looking at the affiliate models, but have decided completely against Ad Sense from Google at this time...

Keep Saving,
Mike.