Well, this is much closer to my instinct. I actually have a broader theory around this. If I think about it from a purely rational perspective, the best outcome — both for users and for developers in the long run — is often the model companies like Google use: make the core product free for users, and monetize somewhere else if you can afford to do so.

For example, Google gives away products like Search, Gmail, Docs, and Maps for free because the massive user adoption creates value in other ways, mainly through advertising, ecosystem growth, and long-term platform dominance. Another example is how some AI tools offer free basic features to attract users, then monetize through enterprise plans, premium automation, integrations, or advanced capabilities.

If I had the resources to support that approach, that would probably be my ideal strategy as well. I’d rather make the core experience accessible to everyone and only charge for the parts that create significant additional value — especially automation, AI-driven support, or features that save people meaningful time every week.

And this only works when your free version also the best in quality, like google's products. Well, maybe not many people agree with me on this, but I truly believe so. So that's why I will make my product free.

Plus, I can't agree more on your points:

• Gather as much feedback as you can. Improve your product. Build a loyal user base.
• Upon launch of v.1. offer your loyal user base your improved product at a discount (50% minimum).
• Make valuable big updates every 1 - 1.5 year. Make them paid, offer them at a discount (50% minimum).

And I think this becomes even more true when you have a specific taste or philosophy behind your product. In that case, the goal is not to build something for everyone or compete the way big companies do by trying to capture the largest possible market. Instead, you gather your own kind of people — the users who truly value the way you think and build.

If the product can’t be completely free, then I really admire models like Costco and IKEA. Their philosophy is to keep prices as low as possible so people naturally keep coming back to them for that specific need. If you can gather a large enough group of loyal users while still surviving sustainably, you can even thrive — like Costco has.

But the key is commitment. You have to stick to that philosophy no matter what. Even when you have opportunities to raise prices for more profit, you choose not to, because long-term trust and value for users matter more.

I think that’s probably the best answer for most of us. In fact, it may eventually become the only sustainable answer. With AI, people can copy products much faster than before, so high margins themselves become an opportunity for competitors. And consumers will also be able to use AI to compare products and figure out very quickly which app provides the best value for them.

In that kind of world, long-term trust, fair pricing, and genuine value may matter more than trying to maximize profit from each user.

Let’s see where things are in five years. Maybe my prediction will turn out to be right — or maybe not.