Wednesday, October 18, 2006

"Freemium": Services that Start Free, Charge for Services

I worry about new online businesses that seem too heavily reliant upon advertising as their only source of revenue. Actually, what I worry about are services that launch with no ads whatsoever, but with the intention of inserting ads at some point in the future. I don't see any real value in pretending that you're not in a profit-making business when, in fact, you are.

A great alternative to all this, is the idea of giving away a basic version of your service, then trying to upsell a more valuable version. CNN has a story about this today, along with a clever new buzzword: "Freemium". They give some good tips on the business model. My personal favorite:
6. Harness the collective intelligence of your users. MÃ¥rten Mickos, CEO of MySQL, says customer suggestions can help speed up product improvements or inspire ideas for premium services.

Holy CrowdSourcing. That's great: the idea of giving away the service can naturally create a community of people that are clearly involved with the concept and can help to establish the core group of consumer-advocates that can be critical to success.
Save This Page

4 Comments:

Anonymous Vera Bass said...

I don't understand not doing this for any intangible product to be sold on the web.

I've declined to pay for something that I may have been very happy with a great many times because there were no free samples or decent previews. I'd buy an expensive business report, for eaxmple based on table of contents, a page of excerpts, and an author(s) bio, but not on a title alone.

The biggest problem for me as a consumer in this new economic model for selling intangibles is that people decide that if what they have is very valuable they don't need to give anything away free at all. So they end up selling to their own inner circle only at a resulting much higher cost.

Conversely, not being sure of the monetary value of your commodity, and giving too much of it away, or all of it at the beginning, will get you a lot more customers but most of them won't be willing to pay anything later.

Vera

12:57 PM  
Anonymous Anonymous said...

Hey Gary,
Long time, no see. For more on the origins of this "clever new buzzword", check out Fred Wilson's blog... :)
http://avc.blogs.com/a_vc/2006/03/the_freemium_bu.html
--Jarid

12:29 PM  
Blogger mark b said...

Thanks for your great post.I like this very much,Black PC Dell Inspiron i560-5383NBK Desktop (Piano Black),jerseys with numbers,Pocket Watches,The best notebook,Graphic cards,price of a netbook,headphone earbud,the best backpacks,laptop bag and cases,MP3 Downloads,Finding a Ring,collar shirts for men,Batu Akik Kecubung,Calculator for graphing,Accounting software programs,Mouse cordless optical,Price for mp3 player,Glove Oven,smoothies blenders,Golf Bags,PC tablet prices,software for audio editing,commercial arbitration,short love poems and quote,car covercraft,healthy organic food,

11:40 AM  
Blogger mark b said...

this post is goodBusiness based at home,motorcycle,lg cell phones,cell phone battery,walkie talkie talk,cheap dvd portable player,antenna for wifi,Asas Hukum,antenna for wifi,screen protector for monit,battery for a laptop,a leather wallet,android cell phone,Cell Phones with Service,cell phone cases,jenis Akik,solar lamps for garden,pump with filter,flip flops sandals,fragrance for men,women fragrances perfume,Movie this year,universal cell phone battery charger,

11:40 AM  

Post a Comment

<< Home