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". So, I think uptake of the free version would be much higher than the free trial.
2) As noted in an earlier response, there is a lot of goodwill that builds from having a lot of users of the free product. This goodwill translates into improved marketing.
But, of course there are tradeoffs. The biggest one is the degree to which the free version will cannibalize sales of the paid product. Finding the right balance of what to include in the free version vs. what to charge the premium for is tricky.
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.
And one more thing about freemium - many people will come just because it is free. if and when you ask for money, they will disappear.
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 less likely is that the supposed network effect of the free version leads to anything. When there are only 100 potential users of your software worldwide, you better make them 100 paying users.
Personally, I don't see ethical concerns with the freemium model. Paying users are paying for the free members, but it's their own choice to do so.
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 with all other things, the best way is to take a reasonable starting point for your business, test and refine based on results.
After taking a quick look at your "sneak peak" page, I have a couple of thoughts.
First of all, I see the potential for this bringing compelling value to smaller businesses without social media expertise, but isn't that lack of awareness about social media (and the benefits of your service) also a pretty big sales barrier?
Whenever I think of this "to freemium or not to freemium?" question, I think of 37Signals and their blockbuster Basecamp offering. Even now, they still offer (although less prominently, as I remember my earlier experiences with their pricing page) a free subscription with reduced functionality.
The premise is simple and (to me, at least) very compelling: "Don't just take our pitch for it; get a real taste of the product. You can use it for as long as you want, but we are confident that your experience will be so great you will soon be throwing us money to get more."
It seems to me that your product is very similar today to where Basecamp was at its launch. Few people really understood web-based project collaboration back then, and the freemium plan proved to be a great way to educate the market.
Isn't your offering at the same place now with your target market, re: the need to educate them about tapping the power of social media?
I just read about what you're offering. Interesting. Personally, I'd say go with free trial and then convert to paid. I've seen many ethical concerns about the freemium business model because essentially all the paying users are paying for the free members. Although I don't mean to completely discredit the freemium model, it's worth noting.
Give someone a taste of how great your stuff is, if it truly is great, have them convert to paid. If not, then find out why they didn't convert so you can tweak your offering/service. I'd be interested to help you more with this/act as a sounding board.
You can also conduct a survey with a few people who work in the social media business and find out what they would prefer. Find out how much they'd pay, etc... but personally, I wouldn't overthink it too much. Offer a free trial and run with it. Art of the Start by Guy Kawasaki talks about making sales and tweaking things later... make sales, and maybe add freemium later. :) I would be curious to know which route you take and how it goes, though. I'll keep an eye on the blog :)
Personally I don't like to sign up for trials, since I don't want to have a hard deadline to 'upgrade' but I will sign up for free 'basic' apps because I can use them for as long as I want and can upgrade when the the time is right. On thing to keep in mind -- your free version has to be functional. No one will upgrade if the free stuff doesn't do anything useful.
If the cost of upkeep of a user is low, then "free" users may be considered "free" marketing.
If during the course of daily usage lots of user-specific data is generated, then it will be hard for them to walk away because they'll need to take their data and recreate it elsewhere.
You may then consider allowing "free" with a usage limit. Set the limit high enough so that it will only be reached after a few months of usage. When they hit that limit, they're already hooked and will consider paying.
Hope that helps.
If there is a compelling reason to pay then having a free version makes sense.
For example, you could have a web application that duplicates what Photoshop does, so you allow them to use it for free, and to save their work, but if they want to export it or do anything special with it then they need to either pay each time or pay a membership.
The difficulty is determining if it makes more sense to charge by usage or a membership at that point.
The problem with free trials is that it is easy to get around it, if you are tracking by email address, as I could keep going to yahoo and getting new email addresses, use your service, and repeat until I get tired of it.
It would help if you explained your product a bit, to give some better thoughts.