When I was first thinking about setting up a business I touched briefly on the concept of Freemium.
Now that I am underway with my new business it is now time to give it serious thought.
There are a wide array of articles in relation to freemium, and to boil them all down – there is no one right or wrong way – as always it depends on a number of factors.
Mailchimp for example spent 8 years refining their product and pricing before they felt confident a Freemium offering would be beneficial. While companies like Dropbox, Evernote and Slack embraced Freemium from the beginning and the majority of their success is based on their Freemium model.
That said, businesses that target markets above 100 million, can be quite happy with 1% conversion rates as 1 million paying customers can generate an extremely healthy business.
My general feeling is that it is extremely important to truly understand what customers value in your product before embarking on a Freemium journey. This need not take eight years like Mailchimp, but really understanding and your market for a period of time prevents the guesswork associated with launching Freemium from day one.
Also you don’t need to be worried about not launching, you can always introduce Freemium when the time is right.
This quote from a recent article I read encapsulates my current thinking:
“If implemented right, Freemium can be a long-term revenue driver for businesses. However, this can only be realized by measuring metrics that showcase this strategy’s impact over time.”
Freemium: Playing the Long Game
Freemium is definitely something I want to explore in the future but in the first instance I want to measure and understand value. That said, I will have a Free Trial Version so that at least allows potential customer to access the product before committing.