Hot answers tagged freemium
9
We're dealing with this very issue right now at HubSpot.
Right now, we have a free trial of the product, but I'm pushing for moving this to a freemium model.
My primary arguments:
1) There are some number of users that simply will not invest in a trial. But, if there's a free version of the product, they may think "hey, I get the basic features forever". ...
7
The answer probably would be "it depends". How easily is your product segmentable into free/paid versions? If there's a pretty clear feature breakdown between what a functional free version would like vs. a premium version people would pay for, then a freemium model may make sense. A great example of this would be dropbox.com which offers several gigs for ...
7
Maybe try to decide by looking what you like the most. Have you ever wanted to review some online product yourself?
Well I did and here is my $0.02 on it.
free package - often so unusable that you can't really do anything with it and you abandon the evaluation of it; in rare cases it is fantastically usable, problem can be that my needs are less than a ...
7
I read the Dropbox: The Inside Story Of Tech's Hottest Startup article. The reason they expect their revenue to double even if they don't get a single NEW user is because they expect more of the current 50 million users to become paying customers.
7
Those who are asking for an unlimited free version aren't likely to convert into paying customers so disregard them.
The actual premise of the freemium model is that users will convert into customers once they reach the ceiling of the allowed capacity (the number of projects/contacts/collaborators/tasks/etc). It also allows to test drive the product without ...
6
Advantage of the freemium model are that your program is more likely to become well-known when there are many users of the free version who spread the word. Optimaly, a community forms that essentially does a large part of the marketing for you. For obvious reasons, the more specialised your software is, i.e. the lower the number of potential users is, the ...
6
Are you saying this is a desktop application? You provided a "freemium" download which had few or no limitations?
If that is the case the first thing to recognize is that the thousands of users who already have the product are basically lost customers. Your chances of converting them to paying customers are very slight right now. Stop worrying about them ...
5
I've found with my product and my client's products that allowing someone to test drive your app helps them become more confident with the solution and reduce their perceived risk. The key is to allow them to access all of the functionality, but enforce restrictions that encourage them to upgrade once they achieve some level of success.
For example, an ...
5
What the general strategy tends to be is to offer a free version of the application for testing, and to build traction with your users, and then come out with a paid version once you have a significant user base. A portion of your existing user base will convert to the paid version, netting you income, and you wont piss of the rest of your customers.
...
5
Up until 2 months ago I had a freemium option for my SaaS. I was getting over 1000 free account signups a month and less than 20 paid signups. I then happened to re-read http://www.softwarebyrob.com/2010/08/18/why-free-plans-dont-work/ and decided to can free accounts. My paid account signups have jumped five fold in the two subsequent months.
Every service ...
5
Great question. Free is what you make of it.
Positives given your situation.
You can open the market up to smaller players who can't afford the big stuff yet.
You can get a solid market share.
You get to test your ideas and are more likely to get feedback, which at the outset is far more valuable.
Negatives.
How are you going to pay for the ...
4
Personally, I think a lot of the recent hand-wringing about freemium (and "free" for that matter) is much ado about nothing. It was not that long ago when media and analysts et. al., were decrying (free) opensource products as portending the end of civilization as we knew it. Now having the word "free" in your business plan marks you as a clueless ...
4
In my businesses that are B2C, we offer Freemium. Here is what has worked for us.
Serving Ads on free
Limited Support for free customers, (NO PHONE SUPPORT, users forum), we offer technical support, and although we say we dont give phone support, if someone calls they get help. We discourage it, but find that if someone calls we can usually try really ...
4
Your 30 day trial is adequate for right now. Rather than going back and hack up your solid product to make a stripped down crappier version of it, think of something that you can offer for free that gives away just enough value to get past the friction of signing up, but does not cannibalize your paid subscriptions. It doesn't even have to be a CMS, it can ...
4
If this product has to do with user's data (ie., data will be saved somewhere like 'notes') I strongly advise you to provide a free version. It's a "lock in strategy" where user must return to your product and use it; so at some point they need to either upgrade (to a paid version) or export (if function exists) to their local computer.
However, if the ...
4
It depends.
Obviously you've identified that some of these feature requests are in-line with the key-aims of your application and implement them where you see fit.
To answer effectively, you really need to tell us more about the business model. As a free B2B product, how do you make money? Is it through advertising? Are you using this 'service' to channel ...
4
Without knowing more about your business model it's hard to say. However the simplest and most effective technique I know to reduce support costs for free tiers is not to have them. Charge instead.
Free tiers always get the highest support costs - since you get the folk who are price sensitive first, and value sensitive second.
3
There has been some good answers to your question already but I thought I would throw my view in as a user of many web apps, some paid for and some free.
My favourite SaaS or web app model is offering a fully featured free trial for 30 days (or whatever timescale is most relevant) and then dropping down to a free version at the end of the 30 days if the ...
3
FX, you are not in a bad position with the number of users. What you need to do is remove the features from your fremium. Strip down your fremium product to its bare essentials. Next give your current fremium users a discounted "loyalty" plan if they become subscribers.
For example, say your lowest price point is 15 per month. Consider giving the legacy ...
3
Somewhat difficult to advise without additional info (service type, number of plans, comparison of features w/ competition) - but here is a good paper on the attributes behind the freemium business model.
In addition, there is a good exchange here on freemium or not freemium.
3
Congratulations! You've accidentally discovered the profound truth that strict constraints (being new to Ruby, say) sometimes produce better products (you stayed simple and users liked it!).
Your best test may be to introduce the charge soonest, with, say, a three month free trial, with no need for people to pre-enter payment details.
That gives you time ...
3
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 ...
2
We went through a similar decision making process at my company. What we learnt was that a time-bound "free trial" with access to all features of the product had a higher conversion rate than a cannibalized time-unlimited free product. The key is to get the correct time limit for the free trial and nurturing users over the free trial so that they convert. As ...
2
Yes there are statistics.
Mailchimp has an excellent blog post about this very thing.
Going Freemium: One Year Later
and this great article
Why free plans don't work
2
I agree with Tim's point on "make sure you have strong data/financials to understand what would make better sense (and better revenue) for your business- freemium vs trial/pay." and Brant's point re: "Resources (including for acquisition) should only be committed to free relative to the conversion rate to paid."
If you decide freemium is the way to go, I ...
2
I think there are some important aspects to the Fremium business model that exist in the examples you cited. I'm not sure if this is the case for all companies with a freemium model.
Switching Costs - In some of your examples (FogBugz & Atlassian), there is a network effect in place. These tools are targeted at making teams more effective, and as the ...
2
One reason is to offer the typical "The first one is free" drug dealer concept. Once you are hooked you need it. Then when you grow you can afford it and will pay for it.
They don't cannibalize their sales since the people taking advantage of the free versions wouldn't have bought it, but they also eat away at market share of competitors.
You missed a ...
2
As a user I really love products with a basic, free version. However, I understand that it might not economically feasible for the vendor to offer such freemium version.
If you're selling a product installed on end-user machines, each free license it's simply a missed sale and it costs you nothing. If you're offering a service (like us), every free account ...
2
In his book on free, Chris Anderson suggests there is a bigger jump from free to a trivial amount than from a trivial amount to more, so you need to consider carefully whether you want to charge - will you really gain from adding what is a substantial barrier?
Also, as soon as you start charging a small amount, people will start to expect support and feel ...
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