David Cummings on Startups

Ideal Characteristics of Freemium Products

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David Cummings

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Continuing the post from yesterday on the freemium business model, which elicited several comments, I wanted to offer up some more thoughts. In general, businesses are better off offering a proof of concept/free trial the majority of the time instead of a free edition of their product. With that said, here are the ideal characteristics of a product where the freemium approach works:

  • Ability to demonstrate immediate and obvious value (I contend most freemium products fail because it is too difficult to get value from them without serious hand holding by the vendor)
  • Minimally invasive product e.g. it doesn’t take over a website, doesn’t require a DNS change, doesn’t require IT people to help configure, doesn’t introduce confusing jargon, etc
  • Known type of market e.g. people already have expectations of product functionality like email marketing, CRM, etc
  • Clear value proposition and reason for upgrading later e.g. limits to key functionality, additional features, etc

What else? What are some other ideal characteristics of a freemium model?

Comments

4 responses to “Ideal Characteristics of Freemium Products”

  1. Paul Freet Avatar
    Paul Freet

    A freemium works well only if the cost pf onboarding and supporting customers is as close to zero as possible. It must scale without without distracting your sales and support teams. easy to use, discoverable, great documentation, and a support forum to a must.

    Reply
    1. David Cummings Avatar
      David Cummings

      Thanks Paul! I agree with your comment.

      Reply
  2. Rishi Dean Avatar
    Rishi Dean

    David – great post!

    Completely agree with all of the points, I would add that it is essential for the provider-side to deeply understand whether their business / service can support the freemium economics — that is, their fully-burdened costs-to-serve and their ability to convert trial users to paying users.

    On a related note, I think it also depends on how one defines their freemium limitations that can drive costs, as well as the factors you’ve described. I wrote about this here in my blog, hope it helps provide some additional insight…or at least, raises the right questions: http://bit.ly/limitingfreemium

    Reply
  3. SaaS Generations 1, 2, and 3 – David Cummings on Startups

    […] immediately. This category is often called bottoms-up or freemium as it starts with functional business users getting a job done and spreads in organizations without I.T. involvement. 2nd generation SaaS is bought differently […]

    Reply

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