Question
I'm considering developing a freemium SaaS application starting with one paid tier at $1 per computer per month. There are already SaaS products in the market that don't have my product's specific feature set, but if they wanted to, they could easily add it. I can envision future paid tiers at higher levels, and also this product might help sell my firm's consulting services. How do I evaluate whether this is a worthwhile pursuit?
Answer
One element of your question would concern me; if an incumbent sees your success, they could easily add your unique feature. If it really is just that simple, it seems like a risky project.
On the other hand, if you also have a lower margin business model that your competitors can't easily match then that risk is mitigated. For example, you launch with free base product and $1+/month for extra features whereas they are $10/month basic. It's hard for a company to come down in price like that (see Innovator's Dilemma).
Of course there are other factors, but that one stood out.
