Comments on: Planning a “Freemium” Revenue Model http://blog.recurly.com/2009/10/planning-a-freemium-revenue-model/ Super Simple Subscriptions Tue, 31 Jan 2012 09:29:39 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Flow » Blog Archive » Daily Digest for February 24th - The zeitgeist daily http://blog.recurly.com/2009/10/planning-a-freemium-revenue-model/comment-page-1/#comment-171 Flow » Blog Archive » Daily Digest for February 24th - The zeitgeist daily Wed, 24 Feb 2010 09:46:04 +0000 http://blog.recurly.com/?p=24#comment-171 [...] Shared How to Plan a “Freemium” Revenue Model. [...] [...] Shared How to Plan a “Freemium” Revenue Model. [...]

]]> By: startupbug.com http://blog.recurly.com/2009/10/planning-a-freemium-revenue-model/comment-page-1/#comment-170 startupbug.com Wed, 24 Feb 2010 04:59:14 +0000 http://blog.recurly.com/?p=24#comment-170 <strong>Planning a “Freemium” Revenue Model...</strong> I’ve been talking to a lot of people about the future of social gaming lately. The perspectives I’ve been gathering are pretty interesting. A repeating theme is the question of what the future looks like. Is it going to look like console games? Wha... Planning a “Freemium” Revenue Model…

I’ve been talking to a lot of people about the future of social gaming lately. The perspectives I’ve been gathering are pretty interesting. A repeating theme is the question of what the future looks like. Is it going to look like console games? Wha…

]]> By: Dave Rodenbaugh http://blog.recurly.com/2009/10/planning-a-freemium-revenue-model/comment-page-1/#comment-168 Dave Rodenbaugh Tue, 23 Feb 2010 18:20:40 +0000 http://blog.recurly.com/?p=24#comment-168 "The hook for offering the initial 2gb of storage it build buzz or “virality”- which drives new customer signups. With a free to paid conversion rate remaining constant, more free users means more paid users. To help decide how to best price your product, construct cost models that can demonstrate where your break even point occurs. This will help guide you in putting together pricing plans that can easily fit into a freemium model." You've distilled freemium a little too narrowly: 1) Create a product 2) Divide into free/paid, make sure free is the right balance of usability/restriction 3) Go viral 4) Profit! You need to make a compelling product that has clear market need, if you're expecting virality, that market had better be BIG, and the free product should be not so usable as to keep users in the free plan forever. And as far as conversion rates being constant, if you go viral, that's actually wrong. Your conversion rates may increase because of the virality...And even worse, if you fail to strike the balance right initially, you'll either make the free users mad when you take away features to make them upgrade, or you'll make a free product so compelling they never want or need to upgrade. And if your competition offers the same for free, well, you're screwed. This is tricky stuff...not as easy as you say. “The hook for offering the initial 2gb of storage it build buzz or “virality”- which drives new customer signups. With a free to paid conversion rate remaining constant, more free users means more paid users. To help decide how to best price your product, construct cost models that can demonstrate where your break even point occurs. This will help guide you in putting together pricing plans that can easily fit into a freemium model.”

You’ve distilled freemium a little too narrowly:
1) Create a product
2) Divide into free/paid, make sure free is the right balance of usability/restriction
3) Go viral
4) Profit!

You need to make a compelling product that has clear market need, if you’re expecting virality, that market had better be BIG, and the free product should be not so usable as to keep users in the free plan forever.

And as far as conversion rates being constant, if you go viral, that’s actually wrong. Your conversion rates may increase because of the virality…And even worse, if you fail to strike the balance right initially, you’ll either make the free users mad when you take away features to make them upgrade, or you’ll make a free product so compelling they never want or need to upgrade. And if your competition offers the same for free, well, you’re screwed.

This is tricky stuff…not as easy as you say.

]]> By: Guy At HockeyBias dot com http://blog.recurly.com/2009/10/planning-a-freemium-revenue-model/comment-page-1/#comment-166 Guy At HockeyBias dot com Tue, 23 Feb 2010 16:33:49 +0000 http://blog.recurly.com/?p=24#comment-166 Well put! Well put!

]]> By: Tim http://blog.recurly.com/2009/10/planning-a-freemium-revenue-model/comment-page-1/#comment-3 Tim Sun, 25 Oct 2009 17:13:52 +0000 http://blog.recurly.com/?p=24#comment-3 You bring up a great point Peter, and getting the division right between the paid and free product is crucial to the success of the model. A too feature rich free product limits the need to purchase the paid product, and a too crippled product won't be usable (and difficult to recommend to anyone). Chris Anderson gave a great presentation on this yesterday at startup school. Techcrunch had a great summary here: http://www.techcrunch.com/2009/10/24/startup-school-wired-editor-chris-anderson-on-freemium-business-models/ You bring up a great point Peter, and getting the division right between the paid and free product is crucial to the success of the model.

A too feature rich free product limits the need to purchase the paid product, and a too crippled product won’t be usable (and difficult to recommend to anyone). Chris Anderson gave a great presentation on this yesterday at startup school. Techcrunch had a great summary here: http://www.techcrunch.com/2009/10/24/startup-school-wired-editor-chris-anderson-on-freemium-business-models/

]]> By: Peter Froberg http://blog.recurly.com/2009/10/planning-a-freemium-revenue-model/comment-page-1/#comment-2 Peter Froberg Thu, 15 Oct 2009 11:41:58 +0000 http://blog.recurly.com/?p=24#comment-2 I think it is important to focus in the devision between paid and free. A good rule of thumb is that the free product should be something that can be use in and of itself. While at the same time delivering enough value for the users to want to tell their friends. The Paid product should deliver so much value on top of the free, that a certain percentage would deem it worth paying for I think it is important to focus in the devision between paid and free.

A good rule of thumb is that the free product should be something that can be use in and of itself. While at the same time delivering enough value for the users to want to tell their friends.

The Paid product should deliver so much value on top of the free, that a certain percentage would deem it worth paying for

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