To freemium or not to freemium | Hacker News Reader

To freemium or not to freemium

12 pointsmindlogr6 comments

I've been battling the question of freemium for a while and want to hear people's thoughts on this model.

Our project has been freemium for a while, but we are considering making it paid for only.

The way I see it, freemium works only if the product itself has lots of inherent shareability and social network effects. Our product does not because it focuses on individuals and is a private personal platform which users use by themselves, and produces content that users do not want to share, ie it's private stuff.

We figured that going to a paid model would reduce the number of sign ups, however many would still be prepared to pay a small fee for use.

What are your experiences of freemium and would love to hear stories where it worked for you and why, and those where freemium didn't work at all.

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OK, one of my titles was Global Head of Freemium Channel, so here is my take:

1)I've never seen a freemium business reach above 15% paid users from total active base - if your economics cannot support this for a long time, get out right away. Most freemium business are roaches surviving on 1-5% conversions.

2) Freemium works best when:

- User has to urgently do something now that is limited (faster=paid, free= slow, those annoying download places that make you wait 1 min for each download or sign up to download now do make money of this simple fact)

- User finds content worth paying for in the sea of free content (NYT)

- User has low barriers to start, but would be hard to leave (e.g. upload photos) service

- User uses service, then gets to bill usage to others (e.g. malware software, document delivery, b2b stuff)

- User base can easily reach limits of free service and will require more eventually (e.g. data storage)

- User base can clearly be defined as amateur vs. professionals, and the professionals will need more features and pay (e.g. Wordpress plugins, Salesforce API apps, etc...)

- User base will be so large the business can be sustained with advertising (what most people want to build but ends up failing all the time - cant get done properly without a miracle)

My advice is start with the paid, always. It will give you a realistic conversion result + you can always go lower/free later. If some people already want to pay you, take their money! You might want to bill first, offer the freemium solution later via email to 'grow' truly interested users that would convert at some point. Freemium 'fools' a lot of business who do NOT track everything religiously.

The freemium business is fragile like a soufle, so when everything is perfect it works but when not, its an epic fail. Proceed with caution.

If your product is about sharing in small group then it's best if the freemium plan allows only public sharing so users have an incentive to pay.

Next step is to make sure that users who like sharing publicly don't sign up in the first place because they're not your target audience and public sharing can come with support headaches (think about copyright claims for example).

Does your pay-for plan already include a free trial period? Be it a week or month, it forces users to make a decision to upgrade. In my experience lots of users simply forget and reminders/ads don't work well as they can be ignored.

That is the question.

Whether 'tis Nobler in the mind to suffer

The Churns and Reviews of a Freemium Launching,

Or Call-to-Action against a Sea of Funnels,

And by so closing, sell them: to die, to sleep

No more; and by a sleep, to say we end

The Startup, and the thousand Natural shocks

Free Work is heir to? 'Tis a consummation

Devoutly to be wished. To die, to sleep,

To sleep, perchance to Dream; aye, there's the rub,

For in that Startup death, what dreams may come,

When we have shuffled off this failed toil,

Must give us pause. There's the respect

That makes Calamity of unpaid-for work:

For who would bear the Whips and Scorns online,

The Harassers pr0n, the troll man's Obscenely,

The pangs of despised Launch, PayPal’s delay,

The insolence of Coders, and the Spurns

That patient merit of the spammers takes,

When he himself might his Quietus make

With a Paid Signup? Who would Zuckerberg,

To grunt and sweat under an ad-free life,

But that the dread of something after death,

The undiscovered Country, from whose bourn

No Traveller returns, Puzzles the will,

And makes us rather bear those ads we have,

Than fly to others that we know not of.

Thus Freemium does make Cowards of us all,

And thus the Native hue of PayG

Is sicklied o'er, with the pale cast of Thought,

And enterprises of great pitch and moment,

With this regard their Currents turn awry,

And lose the Call to Action. Soft you now,

The fair Dropboxia? Nymph, in my Support Mails

Be all thy sins remembered.

I read this to my team. The laughs and tears are flowing

There are only two big reasons to release a freemium offering. 1) To upsell free users later 2) To use free users as marketing.

I wrote an article on this last month... http://taprun.com/articles/secret-to-freemium-pricing

Forget freemium: You’re building a business!

https://blog.ruxit.com/forget-freemium-youre-building-busine...

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