Should I monetize through advertising or user subscriptions?

Buddy, you've hit on a crucial point, a hurdle every aspiring product person has to ponder. There's no absolute good or bad between these two models. It's like opening a restaurant: do you want a high-volume, low-margin fast-food joint, or a high-ticket, exquisite private dining restaurant?

Let's break it down.

Earning Through Advertising (The Fast-Food Model)

Core Logic: I offer something free (an app, website, tool) to attract a massive number of users. With many users, traffic grows, like a bustling public square. Then, I sell "ad spaces" in this square (e.g., banners, splash screens in the app) to brands looking to advertise, earning money from them. Users are my product; advertisers are my customers.
Pros:
1. Rapid User Acquisition: Because it's free, people have no psychological burden, and the barrier to downloading and trying it out is extremely low. If the product itself is good, it can easily spread by word-of-mouth, leading to rapid user growth.
2. High Ceiling for Growth: If you can truly achieve the scale of TikTok or WeChat, with hundreds of millions of users, your advertising revenue can be astronomical, offering immense potential.
Challenges:
1. User Volume is the Lifeline: The lifeblood of this model is "massive" user numbers. A few thousand or tens of thousands of users might not even cover server costs. You need to aim for millions, tens of millions, or even hundreds of millions of users, which demands extremely high standards for product, technology, and operations.
2. The Dilemma: User Experience vs. Monetization: If you add too many ads, users get annoyed, thinking, "Why is this app full of spam?" and uninstall it. If you add too few, you don't make money. Finding this balance is incredibly difficult.
3. You Have to Serve Two Masters: You need to keep users happy and advertisers satisfied, and their needs often conflict.

What kind of products are suitable? Typically, "high-frequency, non-essential" products. For example, social media, news, casual games, or utility apps. Users open them daily, but life wouldn't fall apart without them. Such products find it hard to get users to pay, but their massive traffic can be monetized through ads.

Earning Through User Payments (The Private Dining Model)

Core Logic: My product is designed for users. It genuinely solves a pain point or provides unique value. If you find it worthwhile, you pay me directly. This payment can be a one-time purchase (e.g., buying software), a subscription (monthly/annual fees), or payment for value-added services (basic features free, advanced features paid, i.e., the Freemium model).
Pros:
1. Healthy and Direct Business Model: You only need to serve your users well. Users are your bread and butter, and your goal is pure: make the product excellent, keep them satisfied, and ensure they continue to pay.
2. Stable and Predictable Revenue: Especially with subscriptions, you can roughly estimate monthly income, ensuring healthy cash flow and facilitating future planning.
3. Doesn't Require Massive Users: Even if you only have 1,000 loyal fans, and each is willing to pay you $300 a year, you still have $300,000 in annual revenue. This can be much easier than catering to millions of "free riders."
Challenges:
1. Getting Users to Pay is Extremely Difficult: In an internet culture accustomed to free services, convincing users to willingly open their wallets is one of the hardest things in the world. Your product must offer "must-have" value.
2. Slower Growth: The payment barrier will deter a large number of potential users, making the user growth curve much steeper than with a free model.
3. Demands Extremely High Product Value: You have to ask yourself: Is your product a "painkiller" that solves a problem, or a "vitamin" that's nice to have? People are willing to pay for painkillers, but rarely for vitamins.

What kind of products are suitable? Typically, "low-frequency, highly essential" products or those offering professional, in-depth value. Examples include professional productivity tools (Photoshop), SaaS software solving specific business problems, high-quality course content, or unique community services. These products create clear and significant value for users.

How to Choose? Here are a few angles to consider:

What problem does your product solve? Is it a "pain point" that helps people save money, make money, or save time? If so, a paid model has good prospects. If it's just for entertainment, an ad-based model might be more suitable.
Who are your target users? Are you serving businesses (To B) or individuals (To C)? Business users have budgets and are accustomed to paying for good tools, so To B products almost always go with a paid model. Individual users are much more price-sensitive.
What is your expected user frequency? Will users use it daily, or once a month? Daily use means high traffic, which has advertising potential. If used once a month, that little traffic won't generate much ad revenue; instead, consider how to get them to pay for that single service.

Advice from an Experienced Hand

If possible, prioritize a paid model, even if starting with a very small paid feature.

Why? Because it's the most direct way to test if your product truly has value. If someone is willing to pay, even if it's just one person, it indicates your direction might be right. This gives you more confidence than having 10,000 silent free users.

Many successful products adopt a "Freemium" hybrid model. They use free basic features to attract a large number of users (addressing the user acquisition challenge of the ad model), then convert a small portion of those users into paying customers with powerful advanced features and a better experience (addressing the barrier-to-entry challenge of the paid model). For example, cloud storage services might give you 5GB for free, which works fine, but once it's full, you have to consider paying for more space.

Finally, don't overthink it, just build it first. In the early stages of a product, your biggest task is to survive and find a small group of core users who truly love your product. Don't rush to make big money; instead, talk to these early users, understand why they use your product, and if they'd be willing to pay for it. Their answers are more valuable than any business model analysis.