
Using ‘Free’ to Turn a Profit  - peter123
http://www.nytimes.com/2009/08/30/business/30ping.html
======
apsurd
Clearly freemium has success cases. But I honestly am hesitant to commit to
this advice myself.

The kind of people one attracts with "free" are people that want stuff for
free. Are these customers really the best use of your resources?

My friend constantly tells me to open-source my project, "free attracts, free
attracts" he says.

Attracts what? People that are willing to spend vast amounts of time and
effort to get out of paying a company like 37 signals to just "get it done".

Obviously there are profitable fremium models, but don't you think its an
uphill battle? Do I really want to process 1million customers, so that 1,000
actually pay?

As you might expect, I am a DHH fan. I just thought I'd open the discussion on
the side of being wary to committing to free.

~~~
patio11
I suppose I'm now the moral equivalent of a freemium service. There is a _free
trial_ available. I never disparage the goal of, ultimately, making my
_customers_ happy and in return _accepting their money_. There is a price
staring you in the face from the moment you arrive at the front page.

I think a lot of people sort of fall into freemium because they are hesitant
about charging people money. Don't be. Don't chase after customers who don't
pay money for stuff -- if you don't pay money for stuff, _don't chase after
yourself_ , find a niche which does pay money for stuff. Solve their problems.
Get paid for it, like everyone else who solves their problems.

Incidentally, I sort of like OSS for being a friend catcher in the support of
a paid-for project. (Note that this is very different from the usual "We'll
OSS it and then create a premium version of the same thing, then viciously
compete against ourselves for customers and mindshare" strategy.)

[Edited to add: Incidentally, to get to ~2,000 paying customers I had to
attract substantially in excess of 100k free trials, although the web version
now converts much better (2.07% or so). Since they cost me essentially no
marginal effort no marginal cost beyond advertising, I'm totally OK with that.
If they were paying monthly I'd be sitting pretty!]

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nuweborder
Lure in with FREE, and make functional with standard features that already
beat the competition. And charge for additional services innovative, fun, and
attractive services.

~~~
gscott
It is an insane amount of work to create a product better then the paid
versions, then add in extras that go above and beyond for a fee. Once you
start bringing on people, you have to start working to keep them happy, while
also trying to build those extra features. In a perfect world a person would
have funding to do that but for most startups funding is not available. I have
yet to see a funded startup pull something like that off either.

~~~
Ammmm
Ummm, can you say dropbox?

~~~
gscott
Looking at DropBox, paid users get more megabytes, from my understanding the
original commenter was suggesting free features, then additional paid features
that compliment the free ones or extend upon them, in a freemium fashion.

~~~
nuweborder
Here's a great example of this:
[http://news.cnet.com/8301-13505_3-10314283-16.html?tag=mncol...](http://news.cnet.com/8301-13505_3-10314283-16.html?tag=mncol;title)

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mattmaroon
Sampa? They really had to dig that deep to find a "free" startup that folded?

~~~
apsurd
FWIW I reason there are many more unprofitable freemium startups than
profitable; just have not been around long enough to exhaust all their
funding. They likely picked Sampa because its cooler to say "ex Microsoft
employees tried and failed", and because they don't read HN.

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onreact-com
Also check out "Understandiung Freemium":

<http://news.ycombinator.com/item?id=788490>

