I'd be very interested in knowing what your site was. My email can be retrieved via my profile/blog. Maybe my similar experience can help you.
In a previous life, I ran tag-board.com, which placed a little javascript widget on your website that let your users interact with each other much like an irc channel. This was before ajax was even coined a term. The site still exists, but it's run down and I don't have anything to do with it anymore.
When I first started it, I never thought more than 100 people would ever use it. At it's peak, there were 600k accounts and tons of traffic that went along with that. At first I didn't care to make money, I was just happy that people used something I created, but when I realized I would need more than a $5/month hosting account, I started looking into options.
The first plan was actually a premium model - hack up a bunch of new features that would only be available to paying users and sell accounts for $20/year. It worked, and might for you as well. At some point, I had over 1,000 paying users.
After awhile, the problem was that hosting costs of the free accounts were eating a good part of the profits on the paid accounts AND I was spending a ton of time on maintainance. I felt responsible for pretty decent uptime/performance/bug-freeness since I had people paying money. A friend of mine pointed out that the amount of time/stress I was putting into this wasn't worth the money. This made a ton of sense to me. At that point, I strongly considered just keeping paying users alive until their year ran out, and then axing the whole thing. I then realized that if I was willing to get rid of all my free users anyway, I might as well try something aggressive - I found an ad network and ran popups on the non-premium accounts. This was ~2002. To my surprise, I got fairly minimal grief, more premium signups, no noticeable drop in usage, and enough income to make it worth my while to keep going. This lasted awhile, but popup revenue slowly dried up - firefox and other browsers started killing the popups. I had handed the whole thing off to someone else well before that happened though.
If I were to do it again, I think I'd do the obvious thing that nobody recommended and just charge everyone for the service, although a much smaller fee (maybe $5/yr). I'd let people sign up for free, use the account for a month, and then switch it over to showing an "ad" of sorts on the owner's website where the widget otherwise would be. Clicking through would let the user interact with the widget, but on the "ad" would also be an option for a user of the website to buy the site owner a subscription to this widget. This would dramatically increase the number of potential customers and would essentially be like a tip jar for the website owner. Users could buy the widget as a gift for a website they like to use. At the same time, I wouldn't try to stop people from just creating a new account and getting another month of free usage, but I'd annoy them forcing them to do this every month.
I don't actually know if this would work, but I think it would. I suspect there would be fewer users. However, as a side benefit, you would know what this is worth to those users, which is a nice feeling. The negative here that scares many people from going this route is that if you suddenly start charging, you really do have to provide a service. You can't go down for 2 weeks. And you have to do a little bit of customer service (emails, refunds, fix bugs) or find someone to do it for you.
In a previous life, I ran tag-board.com, which placed a little javascript widget on your website that let your users interact with each other much like an irc channel. This was before ajax was even coined a term. The site still exists, but it's run down and I don't have anything to do with it anymore.
When I first started it, I never thought more than 100 people would ever use it. At it's peak, there were 600k accounts and tons of traffic that went along with that. At first I didn't care to make money, I was just happy that people used something I created, but when I realized I would need more than a $5/month hosting account, I started looking into options.
The first plan was actually a premium model - hack up a bunch of new features that would only be available to paying users and sell accounts for $20/year. It worked, and might for you as well. At some point, I had over 1,000 paying users.
After awhile, the problem was that hosting costs of the free accounts were eating a good part of the profits on the paid accounts AND I was spending a ton of time on maintainance. I felt responsible for pretty decent uptime/performance/bug-freeness since I had people paying money. A friend of mine pointed out that the amount of time/stress I was putting into this wasn't worth the money. This made a ton of sense to me. At that point, I strongly considered just keeping paying users alive until their year ran out, and then axing the whole thing. I then realized that if I was willing to get rid of all my free users anyway, I might as well try something aggressive - I found an ad network and ran popups on the non-premium accounts. This was ~2002. To my surprise, I got fairly minimal grief, more premium signups, no noticeable drop in usage, and enough income to make it worth my while to keep going. This lasted awhile, but popup revenue slowly dried up - firefox and other browsers started killing the popups. I had handed the whole thing off to someone else well before that happened though.
If I were to do it again, I think I'd do the obvious thing that nobody recommended and just charge everyone for the service, although a much smaller fee (maybe $5/yr). I'd let people sign up for free, use the account for a month, and then switch it over to showing an "ad" of sorts on the owner's website where the widget otherwise would be. Clicking through would let the user interact with the widget, but on the "ad" would also be an option for a user of the website to buy the site owner a subscription to this widget. This would dramatically increase the number of potential customers and would essentially be like a tip jar for the website owner. Users could buy the widget as a gift for a website they like to use. At the same time, I wouldn't try to stop people from just creating a new account and getting another month of free usage, but I'd annoy them forcing them to do this every month.
I don't actually know if this would work, but I think it would. I suspect there would be fewer users. However, as a side benefit, you would know what this is worth to those users, which is a nice feeling. The negative here that scares many people from going this route is that if you suddenly start charging, you really do have to provide a service. You can't go down for 2 weeks. And you have to do a little bit of customer service (emails, refunds, fix bugs) or find someone to do it for you.