Your story, down to the timeframe mirrors mine. I created a Pingdom competitor (https://www.pingbrigade.com) that was cheaper to operate and cheaper for the users, while being easier to use and supported IPv6. After I launched it I got several hundred sign ups over the two years, but nobody seemed interested in the paid accounts (they let you monitor more than one thing). I did not realize just how attached I would get to this project and how the fact that it never became profitable would weigh on me. Last month I decided to pull the plug on it and sent out an announcement to the users. I got a few responses of "Noooooo!!!! Why???!!" I know for a fact that business development and marketing were not there and that is why it never took off, but it was my flagship project and it is hard to let it go.
Good luck to you on your next project. Hope it does better.
Thanks for posting about this, I think you've mentioned it before and its changed my mind about offering a free product, other than a 30-day trial for my current side-project. I don't want to get a couple hundred users who love my product but are just a burden for me when the site fizzles. I also don't want 500,000 customers I cannot monetise or even get any marketing value from. With a consumer-oriented site like the SP it is different - you have to give something like that away
I am glad to share my experience. If you end up learning from my mistake, I am happy for it. The sad thing is that I was thinking that I was doing it right: I had the whole freemium thing with individuals using the free version and larger entities going for the paid accounts. Turns out that if there is a large competitor in the space it doesn't matter that they are twice as expensive for their cheapest plan: a business will go with them because of the reputation. In fact, I think their price point makes people feel more comfortable. My paid plan was $4/month (vs PingDom's $9), but I think that's what made it seem like the cheaper alternative. But the biggest problem was that the free plan was too good. It should have lasted for 30 days and then automatically started charging for the premium service.
Things I might have tried (w/ time & energy): a better logo, more SEO, plans start at $10/yr /monitor, 30-45-60-day trial. Text alert to pay for service near end of trial.
Good luck to you on your next project. Hope it does better.