Free isn’t a desperate word among marketers any more, Neither is it a way to ‘lure’ unsuspecting customers to sell them something that they don’t need!!! Nor is it a ‘chocolate’ to bribe customers and tip them over to choose the product with a free offer over another parity product that doesn’t. (Just go to your Mom’s kitchen and look at the odd assortment of spoons, katoris and glasses that all came free and therefore cannot be refused, a la Don Corleone)
Freemium seems to be the hot, new buzz word among marketers. Give it away for free and everything will be hunky dory and the profits will rise, brand awareness will rise and it will be a win-win for both marketer and customer. Unfortunately, not every product and business plan lend themselves to Freemium – the many successes among Freemium-based products and services – Evernote, Dropbox, LinkedIn, Ancestry and a whole slew of others – make it seem that every single service or product are bound to benefit through having a free component weaved in. Sigh!
Hint: It does work better for online products and services that can be scaled and duplicated very fast; as well radical, pioneering services that need to be experienced before plonking down hard cash for them – the category referred to as an ‘Experience Good’.
I suspect it will soon become the benchmark against which a new service or product is judged by – “Is it good enough to give away for free?”
Here’s some more about Freemium and why it may be right for you:
https://www.cmo.com/pricing/your-product-good-enough-give-away-free
Have you ever used Freemium in your business model? Is it an important component of your marketing strategy? Do share your Freemium experience, it would be interesting to know how you used it or tried it and found it inappropriate for your product and why.
Avinash Saurabh
freemium has been used by many companies as a revenue model. The challenge lies in converting the free customers to paid customers.
few points to really ponder upon:
1) create an insanely good product and expect a higher conversion rate of free to paid customer.
2) create a huge customer base and expect good revenues by even lower conversion rate.(The free customer base can be used as evangelists in this case.)
However both the options are equally daunting, and a correctly devised metric while observing customer behaviour will be helpful.
Aditya Kanade
Freemium only works for certain types of products, and should be chosen cautiously. But all said and done, it is the ultimate test of the product. If you give it away for free, and it doesn’t spread like wild fire, something is wrong and you need to re-iterate!
https://mashable.com/2012/06/05/freemium-model-doesnt-work/
kaanchan bugga
Avinash, absolutely agree, especially on point:
Phil Libin of Evernote says it well: “The easiest way to get 1 million people paying is to get 1 billion people using.”
Have you used Freemium in your company/business; do you know of any great Indian examples? Though even free consultations are being given these days by fitness and nutrition consultants; by spas, by cosmetic surgeons, by investment experts, etc… that is a kind of Freemium.
kaanchan bugga
Yes, Aditya, agree completely… but it’s fascinating how ‘Free’ is actually a business model….. ten years ago, it would have been difficult to believe….!
Mahesh Khambadkone
Wouldn’t the samples business be similar in concept. Not popular in India 10 years ago, but quite rampant internationally. Agreed that this scales better online, when ‘manufacturing’ and distribution is almost zero.
kaanchan bugga
Yeah, interesting point Mahesh. Online means scale can be ramped up real fast… also, many online services and products actually need to be experienced before a user can appreciate the value. What would one make of an Ancestry or an Evernote or even Spotify until one experiences it?