October 26th 2010

Freemium is not a strategy. Pricing part 10.

No Free Products

Image by upyernoz via Flickr

Freemium is not a pricing strategy. Pricing part 10.  Freemium is at best a tactic in a strategic plan.   In the depths of my cold salesy (black) heart I abhor giving anything away for free.  Real customers pay.

  • Free users are not hot prospects
  • Free users are not customers.  (Repeat twice and rinse)
  • Free sets your reference price to zero . You can not lower it, and heaven help you when you try to raise it.
  • A start-up whose only product is free is seen as less. Less sustainable, less stable. Remember Xmarks?  I know they are coming back, but with a premium product.

There are a host of ways to monetize your freemium “tactic’ .  At last count I have a list of over  25  separate things you can do.  This is one of the areas where RocketBuilders helps companies get revenue (increase value) where they only see a struggle.  Here are a few ideas:

  • Colligo has a free product download , read only – you pay to be able to write to it
  • Freshbooks gives you a small free trial account, With any kind of growth you need to upgrade to paying for more users/more accounts.  This  also increases your lock in.
  • Dropbox gives you a free cloud storage account. Its  so useful that you quickly fill it, needing to pay to upgrade capacity.
  • Flickr allows three free albums. Once you get lots of pics in there, keeping  them organized requires an upgrade.

In the always pay model, remember Quicktax.  You buy the Standard edition, work your way through the forms and aha you get a prompt, ” You need the upgraded small business/investor/professional version to get more help on saving more money on your  taxes. Click here to enter your credit card number.”  Voila the upgraded version is unlocked.  Brilliant.

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