The Complete Guide To Freemium Business Models. Editor’s note: This guest post was written by Uzi Shmilovici, CEO and founder of Future Simple, which creates online software for small businesses.
The post is based on a study done with Professor Eric Budish, an economics professor at the University of Chicago Booth School of Business. It also includes ideas and comments from Peter Levine, a Venture Partner at Andreessen-Horowitz and a professor at Stanford GSB The idea of offering your product or a version of it for free has been a source of much debate. Pricing is always tricky. Unfortunately, many entrepreneurs don’t give it enough thought. How to make freemium work for you. Following the phenomenal growth of Dropbox and Evernote, many companies are now trying to figure out whether to implement the freemium business model and if so, how to do it successfully.
After studying this topic thoroughly and talking to many entrepreneurs, I found that there were two questions that people kept struggling with: What happens to the customer acquisition cost in freemium? What is the right free/premium segmentation? Why Your Qualified Leads Refuse to Sign Up: The UX of Plans and Pricing. Every SaaS application has a funnel.
Landing page, maybe a demo or pricing page, and then sign up. Qualified leads will stop by your “Plans and Pricing” page to make an informed decision. If you owned a car dealership, would you fill your showroom with stray dogs and blasting loud music?