Is freemium the right model to support your business objectives?
Would freemium be an effective lead generation, conversion, and revenue-driving strategy for your subscription business?
Ask yourself these 10 questions to determine if freemium is a good pricing model for your business.
Viral adoption helps minimize the marketing spend needed to drive free adoption.
To what extent do you expect existing users to encourage others to adopt your service?
Freemium All Stars: Yammer and PayPal
Assuming that you will have a large number of free users, low marginal costs are essential to making this model work.
Can you afford to support each free user?
Freemium All Stars: Asana and WhatsApp
Given that the free-to-paid conversion is typically low, a service that has potential for a mass audience is another way to make it work.
Is your service something that a lot of people want or need?
Freemium All Stars: Hulu or Dropbox
To convert your free users to paid subscribers, you need to make it beyond easy for them to take the leap.
Have you invested in creating a seamless migration strategy? Are your calls to action so compelling that people can’t help but upgrade?
Freemium All Star: Spotify
Some services inherently increase in value or stickiness the longer you use them, making it too “costly” to make a switch.
Does your service make it hard for people to switch at the drop of a hat?
Freemium All Stars: Evernote and Flickr
If you’re going to have a large base of free users, are there ways you can monetize them outside of a subscription fee, e.g. selling ads?
Freemium All Stars: Pandora and New York Times
Wherever there’s a system, there are going to be people who try to game it.
Do you have the resources to create a rock-solid infrastructure to keep the freeloaders at bay?
Freemium All Star: ShopRunner
Some services become more valuable to an individual user when there are more subscribers.
Is your service powered by a big user base?
Freemium All Star: Match.com and Yammer
For a service with multiple audiences—e.g., corporations and individuals—there can be an opportunity to drive paid conversion in different ways for each.
Do you have entry points for revenue building?
Freemium All Stars: Ariba and LinkedIn
To capitalize on freemium, you have to be ready for it.
Have you got your operations and infrastructure totally dialed?
Freemium All Star: WhatsApp