Freemium Thoughts

If this blog post lived up to its title, then I’d only let you read a portion before you hit a paywall. 😉 There is tension between wanting a large audience to sample your product and losing out on revenue opportunities. It is not always an appropriate selling strategy. Kyle Poyar from Openview identifies these underlying conditions: (a) You have a massive market, (b) your product becomes more valuable the more it is used, and (c) your product has enough value that you can make freemium a positive experience without giving away too much value, and (d) you have a low cost to serve.

Where should the separation be between free and premium services? It should be based on the user experience. Where can they see value in the base product capabilities AND where can they see value in the additional features? This is not likely based on computing resources, such as time limitations or a maximum number of files/components. Keep in mind that some users may stay at the base level of usage and others want the advanced features. In both cases, they want ease of use. You may not pick the best split between free and premium features. Experiment with a few different feature sets. Experiment with pricing.

What are the keys to designing a successful freemium pricing model? Clarity. The pricing model should be clear and not create a source of friction for users. The various levels of extended features should be clear. Users should be clear about what is a premium feature. Surface premium features at opportune times to reduce friction. You may also want to let users try different levels of extended features.

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John Faig

Learnaholic trying to improve learning. Aspiring EdTech product manager. Love chatting about EdTech.