I agree with you Farah, It is indeed a very nice post.

@Stefan – $1 was chosen because we felt that was a minimum we’d have to charge to support a user at cost after taking away Paypal’s fee, infrastructure and long term support costs. Plus we wanted to keep everything as simple as possible.

@Max – Thanks for the link mate – that’s a nice scientific approach but our main concern to this (as you rightly pointed out) is how to actually Price discriminate without users finding out – this is especially challenge in the transparent web world. We were quite concerned that this may impact the goodwill we’d generated with our users.

@Chris – We’re moving away from Paypal to our own merchant account and a commercial card processing gateway. The biggest challenge for us was actually convincing the banks in Australia to give us a merchant acct that could support US dollar and international currencies. Finally we’ve got this going, but it will require us to put up a fairly large term deposit as a security for the merchant account. There are other simple payment processes online that support subscriptions but we felt we wanted to have complete flexibility in our billing systems and chose to go down this path.

Charanjit