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We are developing a freemium business model and have planned some Premium features that users can buy. What are the main differences between these two types of monetization:

  1. Premium model: Buy a Foo or a Bar for 2.00€
  2. Donation model: Donate 2.00€ and choose your preferred gift: a Foo or a Bar

Are users more tempted to donate or to actually buy? As per past experiences users see a higher benefit when buying something directly rather than donating and then choosing a gift.

What are your thoughts on this?

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Who are your customers? – todofixthis Feb 20 '12 at 23:13
We haven't launched yet so it's hard to say. As per our planning, our main persona is going to be a 16-30yo who likes technology and is constantly using social media. The question is meant to be more general with objective views if possible. – XaviEsteve Feb 21 '12 at 8:41

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I'm not a big fan of the donation model unless you are a non-profit or an individual (e.g. artist on kickstarter or something like that).

For a for profit company, it's best to have people buy since it reduces confusions and as you point out, a customer will see a higher benefit. I also think they will be more likely to buy more from you.

I don't have any concrete data on that but a donate model implies that you are not a real business who wants real customers.

You have to be crystal clear that you are in business to win customers and make money. Customers don't donate -- supporters donate. Customers tell you how to improve your product -- supporters feel good about getting a free gift and are not really invested in the products success.

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