Freemium business model in beta (would this work?)


2

I am starting an online b2b networking portal. It is somewhat comparable to linkedin in a sense that most of the content is user generated, meaning more users it has more attractive service becomes. Since it's a network without any users, it is pretty much useless obviously.

Now I am trying to run this as a freemium service, meaning service is for free but if you want to get an extra benefit you can pay for premium. Obviously the selling point of premium service is to get better access to other users similar to what linkedin is doing with its "inmail". So if I dont have user base, I dont see a reason why would someone want to subscribe for premium and as such am hesitant to offer payed services right from the launch (as the user base will be 0 = 0 benefit for subscriber).

I was thinking that in the beginning in the "beta" stage, I am going to offer the whole service for free including premium (status to premium becomes available maybe after you refer the site to your connections by email). The logic behind this is that I want to build a steady user base before I convert some features to premium services and relaunch the website without the "beta" tag. At this point I hope to home some active user base to make the service attractive even for potential premium users.

I am heavily bootstrapped business model so I have no real pressure to turn profits in next year or so.

Do you think this model would work? If so, do you think once I convert beta to the actual service (no real change in functionality expected) and make the premium features payable, users would stay and wont run away, or in other words pay to convert their accounts or stick with basic free service? If I offer the website without premium content in beta stage, I think it wouldn't have as much appeal as it would have with the premium features which I think is important when building your user base from 0.

What do you guys think?

All advice is very appreciated,

Thanks

Pricing Beta Freemium

asked Oct 14 '11 at 22:56
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Peter K.
194 points

1 Answer


2

The honest answer is you won't know until you try.

In your situation I would:

  • offer as many features as you believe the user will need to actively use your service, if some of those can be limited by number (such as mails) you can offer increased numbers in your future premium offering
  • put everything else that could become premium on one side and develop that later
  • focus on increasing your user base, they will inevitably change the direction you take the product in based on their usage

The danger you have by offering everything as premium now is that once you decide to charge you will lose customers and probably create negative attention to what you are doing rather positive attention to all the great benefits you are providing. In some situations this can turn out ok but you have no way of knowing until you try it.

answered Oct 14 '11 at 23:14
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Lloyd S
1,292 points
  • Thank. I agree with what you say and thought I wouldn't know before I try. My project is close to launch atm and all of the premium features have been designed already. Question now is either to offer it to them or not. That's the reason why I would though of "beta" approach, perhaps explaining in some written text, that the project is in it's beta stage at the moment, maybe draft the expected differences between the free and payed accounts. User would be upgraded to payed account once he resend invitations to other users "something for something" model with a note of expected post beta price. – Peter K. 9 years ago
  • ... That way the paying customers can decide if the payed account was beneficial for them or they would stick to standard free account. It's sort of showing them a temporary demo. Perhaps do any of you guys how does other similar websites (again I will mention linkedin) developed their freemium accounts? The offered it from the launch even without any customer base or slowly added it later? – Peter K. 9 years ago

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Pricing Beta Freemium