background preloader

The Complete Guide To Freemium Business Models

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. Free is even trickier and with so many opinions about it, we thought it would be refreshing to take a critical approach and dive deep into why some companies are very successful at employing the model while other companies fail. The Law of Marginal Cost Pricing plays a huge part in competing for customers. Guess what? An Experience Good At the core of the “Free” models are the products or services being offered to the customer. A good example is Dropbox. Related:  Freemium monetization

Ever-Growing Evernote Hits 10 Million Users (425,000 Paying Ones, Too) May 2009: Evernote hits 1 million registered users December 2009: Evernote hits 2 million registered users May 2010: Evernote hits 3 million registered users August 2010: Evernote hits 4 million registered users November 2010: Evernote hits 5 million registered users Today (6 June 2011): Evernote hits 10 million registered users As you can tell from the numbers copied above, that means Evernote attracted about 4 million users since the beginning of this year, but more importantly, the number of premium (paying) users has more than doubled in the past 5 months (from ~200,000 to ~425,000). The startup owes a lot of that growth to its cross-platformness: it offers native apps for Mac, Windows, Web, iPhone, iPad, Android, BlackBerry, Windows Mobile, HP WebOS — with support for more apparently on the way according to today’s company blog post. According to Evernote, 75 percent of its user base uses 2 or more platforms to access its service (some power users apparently use as many as 10).

The freemium flaw Close your eyes, and cast your mind back to the first dotcom boom in the late 90s/early 00s. What’s your overriding memory of that whole crazy period? Or if you’re too young to really remember, what do you immediately think of when you hear dotcom bubble or dotcom boom mentioned in relation to Silicon Valley at the turn of the millennium? I’m going to take a stab and guess that it has something to do with over-inflated valuations of ill-conceived, kooky ideas. We’ve discussed this subject before, looking at why the original dotcom boom of a decade ago isn’t the same as today, and why we won’t see the same widespread collapse of the digital industry. One of the reasons why so many companies failed before was that there was a broad lack of understanding about monetizing the Web. When I interviewed UK investor and entrepreneur Rupert Cook back in July, he reiterated this point, noting that But the point of this piece isn’t so much to dwell on the profitability of dotcom companies. January.

3 modèles économiques innovants sur Internet: freemium, box e-commerce ...., Le Carnet d'une aventurière du Web Déterminer son business model est sans doute l’étape la plus complexe dans la création d’une entreprise. Réaliser et valider un business model est un exercice d’équilibriste qui demande à la fois une capacité à se projeter pour inventer de nouvelles façons de consommer et de la discipline, du réalisme dans l’exécution. Groupon par exemple est né « Thepoint.com » avec la promesse de regrouper des consommateurs pour leur faire réaliser des économies. Son offre ne rencontrant pas son public, le produit et business model ont évolué vers la distribution locale de coupons fortement discountés et déjà négociés. A quoi sert un modèle économique ? Un modèle économique ou business model (BM) décrit les principes selon lesquels une organisation crée, capture et délivre de la valeur. Modèle pour schématiser son business model 3 business models innovants sur Internet Le business model freemium Mailchimp, un service web de routage d’emailing place la limite sur la taille de la base d’emailing.

How the Crowd Is Shaping the Future of Storytelling Molly Barton is president of Book Country, an online community for genre fiction writers, and VP of Digital Publishing, Business Development and Strategy at Penguin Group (USA). Stories are the foundation of human communication, even when first relayed over campfires — an inherently social and communal setting. The storyteller can change his tale based on the expressions on the faces of his audience — speed up here, slow down there, give more background on a character. The storyteller may hear someone else retell his or her own story in a different way, and use that experience in telling new stories or iterating upon the original. In the modern world of broadcast and publisher media, the traditional model relies on a series of individuals reading and choosing which stories will appeal to broad audiences. The Power of Peers Having positive reviews and interest from readers pre-publication will help push the boundaries of what a curator in a big company will be willing to consider.

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? Customer acquisition cost in freemium Some people argue that freemium significantly increases the customer acquisition cost, and that the increase might in turn lead to disastrous results. In order to understand what happens to the customer acquisition cost in freemium, let’s assume that your marketing investment is a given, so we’ll consider what happens to the total amount of premium users in the case of freemium. The total amount of premium users depends on three factors: Traffic. Signup conversion. Premium conversion. The free/premium segmentation The two questions you’ll want to answer are:

Apple cult mocked by Samsung in Galaxy S II ad | Technically Incorrect "I could never get a Samsung," says a self-consciously cool-looking, whiny dude, seated on the sidewalk. "I'm creative." "You're a barista," says the man standing next to him in line. This is perhaps the most touching line in what is a very creditable attempt at mocking the Church of Science-ology that is Apple. The mockery is part of a new ad for the Samsung Galaxy S II, which is a phone of which many might not have heard. The people standing in line in various cities--outside places that look remarkably like Apple stores--are Apple's dedicated followers. This is, thankfully, not similar to the desperate, painful Super Bowl ad created by Motorola for its highly successful Xoom tablet. In that ad, Motorola's ad agency decided to portray Apple as Big Brother--and the Xoom as the second coming of Flower Power. Here, there is a semblance of humor, ergo truth. Sadly, though, the good is tempered a little with the tagline "The Next Big Thing Is Here."

Why Education Startups Do Not Succeed I co-founded PrepMe in 2001. We were one of the first education companies online and the first purely online, personalized platform. We were acquired in 2011 by Providence Equity-backed Ascend Learning. Note: I am going to make some generalizations below. Most entrepreneurs in education build the wrong type of business, because entrepreneurs think of education as a quality problem. “Education is ripe for disruption. First, let’s qualify what they’re saying here. The average person in a developed country does not think about education the way a well educated VC or entrepreneur thinks about education. VCs and entrepreneurs tend to be well educated. The average, middle class person thinks about education as an expenditure, not an investment. So, what has the lack of an education done to the typical American’s life? This fundamental investment vs. expenditure mindset changes everything. Let’s look at some data from the marketplace: Being poor also changes how you think about education.

Business Models : 10 modèles économiques innovants qui ont fait du bruit en 2010 0inShareinShare0 Voici une belle présentation réalisée par Board of Innovation. Elle analyse 10 business models qui ont fait parler d’eux sur le Web en 2010. Si vous cherchez des idées, elle est parfaite pour comprendre les différents modèles, plus ou moins complexes, de génération de revenus sur Internet. Vous retrouverez les modèles suivants : PatientsLikeMe.com : Une plateforme communautaire gratuite pour les patients. Flattr.com : Un système de donation pour du contenu d’information. Groupon.com : La société qui croit plus vite que Google. Spotify.com : Le modèle Freemium pour la musique à la demande : le service de base est gratuit avec de la publicité (pour couvrir les droits d’auteurs) et le service payant (Premium) est garantit sans pub. PayWithaTweet.com : Acheter avec son réseau communautaire, tel est le concept de ce modèle. HumbleBundle.com : Payez ce que vous voulez, le concept est clair. Quirky.com : La création coopérative et l’achat groupé en ligne. Business Models [Via]

Montagspredigt: Social Media und deutsche Markenarbeit – Zwei Welten prallen aufeinander Deutsche Markenarbeit – das ist traditionelle Kommunikation. Monolog. Monolog von der Kanzel herab. Von der Kanzel herab mit erhobenem Zeigefinger. Woher soll der deutsche Markenarbeiter es auch besser wissen? Deutsche Markenarbeit ist Spiegelbild deutscher Konzerne, deutscher Manager, deutscher Arroganz und Ignoranz. Bei der deutschen Markenarbeit geht es nicht um Kreativität, Innovation und Wandel. Nicht mehr und nicht weniger. Die Marke braucht Wandel, sie braucht Vielfalt, sie braucht Kommunikation, Kooperation und Kollaboration. Vor allem aber braucht sie Mut. Deutsche Markenarbeit braucht den Mut zum Risiko. Den Mut, die richtigen Dinge zu tun – und diese Dinge dann auch richtig zu tun. Die deutsche Markenarbeit muß erkennen, daß sie längst nicht mehr existent ist, in Agenturen, in Unternehmen, in Medien, in ihren eigenen Verbänden. Die deutsche Markenarbeit muß erkennen, daß Social Media nicht die Lösung für jedes Problem da draussen ist. 593 direkte Website-Leser 2012

Freemium | Startup Marketing Blog - By Sean Ellis The startup I founded last fall, CatchFree, officially launched at TechCrunch Disrupt on Tuesday of this week. Only a TechCrunch event could offer this: within 24 hour we were contacted by Corp Dev at two of the biggest Internet companies in the world. Of course it’s way too early to have any substantive conversations, but it’s a great early opportunity to build a relationship that could be meaningful down the line. More importantly, TC Disrupt was very helpful in kick starting our UGC. Users submitted and reviewed hundreds of free apps and services on the first day. The Key Challenge with Freemium The vision for CatchFree is based on the frustration I faced trying to help grow 15 freemium startups. Compounding the issue is that freemium businesses can typically only afford to spend about 5-10% of their “premium only” counterparts acquiring a new user. Hub of the Freemium Ecosystem To be effective, CatchFree must adopt the culture and standards of the best freemium companies.

Related: