I posted this comment in response to "Making Money with Wordpress MU - Part Deux" on wpmu.org but thought it'd be a good discussion for this forum.
My question is where is the sweet spot? What kind formula is used to figure this number out. Is it trail and error?
I myself have charged from 29 per month to $14.95 per month, with varied success.
Wordpress.com charges roughly 5.40 per month for a basic upgrade… no-ads, 5GB space, custom css, and about 7.50 per month to add a domain and mapping.
Edublogs, charges $6.95 per month for no ads, 5GB, plugins… and as low as 3.30 per month for a year subscription.
Obviously operation cost play a big part.