I imagine MailChimp, WP Engine, and some other services would disagree.
It's possible to have a plan that suits hobbyists while still being profitable. In this case, as a PaaS, Heroku may not have been able to offer something like that, but it's not universally true that hobbyists are unprofitable.
No, they wouldn't. They've run the numbers. What they figured out is the cost to acquire a paid user is cheaper by having a free account than by buying a bunch of ads.
Free plans or hobbyist plans are really there to get the marketing and cheap customer acquisition, not to power the mainline B2B business. The main business in both cases is likely bolstered by enterprise clients worth 5+ figures a year, but don't likely cost much more than a hobbyist account to maintain.
If you only had a hobbyist offering, you'd go out of business. As this post points out, Heroku has a much larger common offering where they should have plenty of profit at scale.
Meanwhile, they also benefit from hobbyists saying "oh yeah, Heroku is easy, let's use that!"
If you only had a hobbyist offering, you'd go out of business
This just isn't true. To mention WP Engine again, they were hobbyist-only at first. You had to contact them specifically to require an enterprise-grade plan.
Marginal cost. For MailChimp, WP Engine, etc, their code is running regardless. Heroku and other PaaS providers have to commit real resources (RAM, CPU time) that have a much greater cost than running some free work through your existing data pipeline.
It doesn't seem to be a problem for Linode to give me the virtual hardware at a reasonable price. Why would Heroku's software on top of that virtual hardware cost so much more? Is their deployment/management software using that much extra resources?
Linode owns the underlying hardware. Heroku is renting it from AWS. When you own your resources, you have more control over your margins (traditionally).
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Hobbyists rarely pay the bills. Go upmarket or suffer in perpetual purgatory.
I imagine MailChimp, WP Engine, and some other services would disagree.
It's possible to have a plan that suits hobbyists while still being profitable. In this case, as a PaaS, Heroku may not have been able to offer something like that, but it's not universally true that hobbyists are unprofitable.
No, they wouldn't. They've run the numbers. What they figured out is the cost to acquire a paid user is cheaper by having a free account than by buying a bunch of ads.
Free plans or hobbyist plans are really there to get the marketing and cheap customer acquisition, not to power the mainline B2B business. The main business in both cases is likely bolstered by enterprise clients worth 5+ figures a year, but don't likely cost much more than a hobbyist account to maintain.
If you only had a hobbyist offering, you'd go out of business. As this post points out, Heroku has a much larger common offering where they should have plenty of profit at scale.
Meanwhile, they also benefit from hobbyists saying "oh yeah, Heroku is easy, let's use that!"
Heroku is smart, they know what they are doing.
This just isn't true. To mention WP Engine again, they were hobbyist-only at first. You had to contact them specifically to require an enterprise-grade plan.
Marginal cost. For MailChimp, WP Engine, etc, their code is running regardless. Heroku and other PaaS providers have to commit real resources (RAM, CPU time) that have a much greater cost than running some free work through your existing data pipeline.
It doesn't seem to be a problem for Linode to give me the virtual hardware at a reasonable price. Why would Heroku's software on top of that virtual hardware cost so much more? Is their deployment/management software using that much extra resources?
Linode owns the underlying hardware. Heroku is renting it from AWS. When you own your resources, you have more control over your margins (traditionally).