(Basically)Freemium?


3

There has been some great discussion on whether or not "freemium" (i.e. offering a lite edition) is a good way to go:

One thing that doesn't seem to get a lot of discussion is the notion of charging a trivial amount; i.e. relative to the total amount. For example, if the median installation is in the $thousands, charge for the lite version in the tens ($10... $50, whatever). Tens of thousands, maybe a couple hundred bucks.

The advantage (I would imagine) is that charging a little bit makes customers more engaged and likely to use the product they purchased, and by using it, they might find it's most certainly worth the upgrade.

I would presume the disadvantage is less people downloading/using.

What are your thoughts on making something (basically)freemium?

Freemium Free

asked Mar 29 '10 at 14:23
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Alex Papadimoulis
5,901 points
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4 Answers


2

I've seen the "charge a nominal amount" work very well.

You're right that it qualifies the user. It's amazing how many people won't pay e.g. $5 or $10 for something they really need. Clearly those people would never have paid you any amount, so if the ultimate goal is to convert (some of) them into "real" paying users, it's a great way to weed out the silly stuff.

On the other hand, if the goal is to get something into the most possible hands, nothing beats free. It depends on the business model which one is more valuable.

If the idea is to replace "free trial" or as a stepping stone to eventually charging more, I hate the free model if you can afford to charge a trivial amount instead.

Only one thing though -- often "free" people understand that there's no tech support or other services that come with it. But even for just $5, some people suddenly expect the red carpet, even though clearly $5 buys literally no tech support at all -- it will barely cover the cost of processing the payment!

Of course if you're starting out and you want people calling you and talking about your product with you, this is a bonus; otherwise it's an expense you'll have to monitor.

answered Mar 30 '10 at 09:50
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Jason
16,241 points

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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 they have paid for the product.

answered Mar 29 '10 at 16:33
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Mark Stephens
976 points

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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 incurs costs to you. In our case, we won't be offering a free plan, but we'll offer the service for free to all open-source application developers (being a dev-oriented service). Plus, prospects will have a 14-day free trial (no strings, no credit card required).

answered Mar 29 '10 at 21:21
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Deleted
655 points
  • How much energy, effort, cost do you put into qualifying open-source/free users? – Jeff O 7 years ago
  • Products installed on desktops are only free if they don't call you for tech support. – Jason 7 years ago
  • @Jeff Very few efforts actually, just a website check. @Jason You're right, but usually free/basic versions don't include support. – Deleted 7 years ago
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1

For me, it's all about getting potential customers to look at your product. The simplest way to do that is to give it to them for free. The model that I like is the try before you buy (e.g. full version free for 30 days (or whatever duration)).

If you product is useful to customers, then they will want to buy it. Giving potential customers the opportunity to try before they buy shows that you have confidence that your product will add value.

answered Mar 29 '10 at 21:53
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Jarie Bolander
11,411 points

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