Comments on: Free to Freemium: 5 lessons learned from YouSendIt.com

By: Paul_1daylater

Paul_1daylater — Sun, 07 Mar 2010 15:07:14 +0000

Great article

We've had some agonising about how we go from free to freemium over the past few months.

In the end we've decided (rather riskishly) to implement a new freemium model for our web-based service (Well we say 'new' - we've never come across it before - but no doubt someone has thought it up first!). I'd love to get some feedback from you guys.

The idea is that rather than using a 30 day free trial our service offers 3 test-drive passes, which can be used at any time for access to the premium features (see our blog post on this) http://blog.1daylater.com/post/430390913/the-wo... One benefit of this is that 'new and returning' users will not be faced with an expired account after 30 days. One business drawback (potentially) could be a cashflow one, but we're looking at ways to limit this.

1DayLater ( http://1daylater.com ) is a service for tracking users day-to-day time, money and mileage - via a web browser or mobile phone. It aims to help users with billing, mileage claims, organisation and by improving productivity.

As you seem rather experienced we would love some feedback on this new freemium approach. (feedback@1daylater.com) or please leave a comment on our blog!

Thanks!
Paul

By: ranjithkumaran

ranjithkumaran — Mon, 13 Apr 2009 17:35:00 +0000

Never thought to include these, glad you asked. About the only two companies I'd talked to personally about freemium back in 2006 were eFax.com and ZoneAlarm.com. They both had lifecycle marketing down to a science and were using viral distribution (especially the eFax guys) and relationship marketing (both companies) to drive conversion. Since then I've been lucky enough to run into and compare notes with companies as diverse as Skype.com, LogMeIn.com and Pbwiki.com at various stages of their businesses.

It's hard to answer who is doing things most effectively without access to the full numbers but some of the most *elegant* blends of free and mium that I've ever seen, and among my favorites, are Skype, HotOrNot.com (seriously!) and GaiaOnline.com (along with a bunch of others dealing in virtual goods).

It's important to note that not all of these are subscription businesses; we've launched both subscription and pay-as-you-go services at YouSendIt so all of them were relevant models for us.

By: Robbie Kellman Baxter

Robbie Kellman Baxter — Mon, 13 Apr 2009 15:22:11 +0000

Terrific article–Kudos to Andrew an Ranjith!

Question for Ranjith–as you were growing your paid business and transitioning from ad-based revenue, what other companies did you use as models? Who else do you think is blending free and paid subscription models in an effective way?

By: Chris

Chris — Thu, 02 Apr 2009 04:01:34 +0000

As someone who uses your service quite often, I found this very interesting.

By: David Orman

David Orman — Thu, 26 Mar 2009 12:42:29 +0000

Growth is a strange thing. On the surface, it SOUNDS great but if you are ill prepared, growth without preparation can actually kill a business.

David Orman
www.hghplus.net

By: Joe

Joe — Wed, 11 Mar 2009 13:39:39 +0000

Great info. Would you recommend Zuora or AriaSystems over a simple Paypal Pro implementation for subscriptions?

By: startupcfo

startupcfo — Tue, 10 Mar 2009 08:54:10 +0000

Loved this post. Ranjith hits on some key points. With SaaS models early conversion can have a big impact on your revenue (a paid subscriber in January can give you 12 months of revenue, assuming churn is under control).

On my 2nd freemium biz now, we have implemented many controls to measure users and usage. To his point, very small tweaks like the placement of a sign up box, small text changes, etc can have an impact. Architecting your site to enable multivariant testing and leveraging the data from Goog web optimizer is important.

By: gord

gord — Mon, 09 Mar 2009 22:23:53 +0000

I love the way you write. Great article.

Perhaps add an upfront definition of the term “freemium”, for those readers who might be outside a web2.0 startup looking in.

By: Nik

Nik — Mon, 09 Mar 2009 19:44:51 +0000

Thanks Ranjith. We are currently using Authorize.net's ARB system and this works for us for now. We have taken a prelim look at Zuora/Aria but going to do a deeper dive pretty soon…

By: ranjithkumaran

ranjithkumaran — Mon, 09 Mar 2009 19:14:54 +0000

Good questions, we rolled our own payment system from day one (this was in late 2005 / early 2006). The system was limited so testing was initially very serial except for one area: our pay-per-use services (what I call "buying stamps"); we could change these minute-by-minute and they really helped us understand the worth of one single transaction. These days there are so many more payment systems (we've looked at Zuora.com, AriaSystems.com and a handful of others) that freemium businesses can use to scale or get started. They all have their issues when applied to specific business models but it's a night and day difference compared to building all of it yourself.

By: Jason

Jason — Mon, 09 Mar 2009 18:42:45 +0000

Thanks Andrew, great piece.

By: Dan Simard

Dan Simard — Mon, 09 Mar 2009 17:18:38 +0000

We didn't think about the “three offerings” model. We planned to give the classic free VS paid subscription but it is true that a bigger company would like to pay for features that is not necessary helpful for a small team. We'll think about it.

By: Nik

Nik — Mon, 09 Mar 2009 16:43:53 +0000

This is fantastic. I think what would be great to cover (if you are not giving away too much) is the technology infrastructure pieces you had to have in place to keep continuously turning the knobs. For e.g. did you have your in house A/B testing platform? When did you build your own payment infrastructure to test pricing etc?

We are building a freemium service and just getting user tractions and there is no enough literature on the tech infra pieces that one needs to keep iterating.

By: efallen

efallen — Mon, 09 Mar 2009 16:26:18 +0000

completely agree with the compound growth issue being a double edge sword

By: Andy Thomas

Andy Thomas — Mon, 09 Mar 2009 15:21:14 +0000

Another great post. We are launching our product soon and have worked out a payment model that offers the customer the choice of pay as you play or subscription. I have taken on board the comment about having to constantly review activity and wondered what reporting software (funnel, attrition etc) would be recommended - particularly for a start up with limited funds?

my blog: http://connectedthought.wordpress.com/
twitter: mistersmeetme