Dividing free and paid features in "freemium" products

I'm a fan of sitting down, dividing free and paid users in your market, and then mapping the features to the offering such that folks will shake out where you expect them to.

I don't explicitly say "Free for parents, $30 for teachers / Fortune 500 companies / parties" anywhere on my site, but that is essentially what the 15-card free trial cap does.

Your free users are not an undifferentiated mass with a static probability of converting. They've got different needs. Figure out whose needs you can satisfy while charging money for. Do it. Then, for folks you can't conveniently monetize, figure out how you can derive business value from them anyway.

(Stupidly simple: ask them to link to you in your signup mail. This won't take you five seconds to implement, but it works, and you can use all the SEO help you can get to attract more paying users.)

"A final thought: when in doubt, err on the side of putting more features on the paid side of the divide. It’s easy to add features to the free side; however, removing features from the free side is a recipe for trouble."

This is great insight and I hadn't though of it that way. I was leaning the other way, thinking that you really want to get traction first. Then listen to users and create new features you can charge for (if your current ones are not generating enough conversions). Xobni is one example where they took their search and made a better one for premium.

I really hope this thread gets some discussion. I feel like a lot of companies know they want to do freemium (due to strong network effects, etc) but with a 'wait and see' approach on the free/premium split could be disaster.

Am I alone in thinking companies shouldn't hide that there is a paid version? Take a look at Evernote (http://evernote.com/). The front page doesn't mention that there is a free and a paid version except for a subtle "Premium" link in the top right corner. I think they should be upfront with users and show the features of the free and paid versions side by side.

I have grown very fond of the idea of charging users a small signup fee to join a freemium site. You can subtract this fee from the price of the paid service, giving users an incentive to upgrade, and the model gives you several other advantages:

- every user in your DB is someone who thought your service was worth paying for

- you devote zero time to spam fighting

- you can scale your site to handle medium-sized bursts in signups, rather than having to handle large numbers of only-used-once user accounts created whenever your site gets some publicity