

The Anatomy of Profitable Freemium - wensing
http://wensing.tumblr.com/post/25167979206/the-anatomy-of-profitable-freemium

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tsunamifury
I still like the original Doom Shareware model. They gave you what felt like 1
whole game for free, enough that really impressed you and gave sense of a
complete product.

Then they made an offer of 2 more games (or episodes) for a fee. When taken as
a whole, they were only giving 1/3 of the game away for free, but before
purchasing, you felt like you were given an entire unit upfront.

This established a great relationship between the user and ID software. They
demonstrated for free what 1 unit of Doom was, then offered 2 more -- which I
roughly understood what value I would get.

I think creating and segmenting units of a product that are complete in
themselves, but related to other premium offerings is a great way to get a
user to feel both satisfied with a free product but yearning for more. It also
shows that segmenting your sales narrative in freemium is very important. I
get irritated when you interrupt my free unit and offer the rest at cost. I am
happy when I receive a whole unit for free, then am offered more units for a
fee.

~~~
TimJRobinson
League of legends is having massive success with a similar model too. You can
do and experience just about every aspect of the game for free without
annoyances or interruptions about paying and many players start playing for
just that reason then invest a great deal of cash into the game a few months
or even years down the track when they're hooked.

~~~
codehotter
To expand on this: virtually everything is paid for by in game currency you
can earn by playing games. Every game you play makes you money (you earn more
for longer games). Using that money, you can buy almost everything.

The equipment you can buy with the in game currency gives you a real advantage
in player vs player battles. Having no equipment at all means you need a very
large skill advantage over the other players to be able to win games.

To get all things you might reasonably want to buy, you need to play an
uncomfortable amount of games - which gets many people to take a shortcut and
buy the in game currency with real money instead of obtaining it by playing
games.

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MicahWedemeyer
The _Bells and Whistles_ analogy doesn't have to be as bad as it's made out to
be. I run a hybrid "more space" and "more features" freemium model, and it's
the "more features" that gets me most of my conversions.

The key, I've found, is to make sure the features are always visible. Make the
controls (links, buttons, inputs, whatever) always visible, but when the free
users click, they get a "This is for premium, click here to upgrade" notice.

Plus, I have a policy now that any new feature defaults to premium, and I have
to be convinced to make it free. So, the free offering stays the same but the
glitter and gloss of premium gets better and better in comparison.

Finally, never fall into the trap of thinking something should be free because
1) it's easy to do or 2) someone else gives it for free. A "I coded it in 5
minutes" feature that makes life easier for your user sounds like an awesome
premium offering to me.

~~~
ExpiredLink
> Make the controls (links, buttons, inputs, whatever) always visible, but
> when the free users click, they get a "This is for premium

That's a good example how 'freemium' is inherently dishonest and therefore
will not succeed.

~~~
gareim
Just curious, why don't you think it will succeed? The method seems to be
working fine for the guy you just replied to. Are you saying that in the long
run, a better model might win out?

I guess I could see why you'd think that and I might even agree, but I
personally think that knowing what features I'm missing out on better
motivates me to buy the premium product. And if the price is appealing and
worth it to me, then I'd be happy to pay it.

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Zimahl
I'd like to add something to 'Cargo Freemium'.

Plants vs. Zombies on the iPhone is somewhat this way (pay $.99 for the app)
and then you earn coins in the game that you use to purchase mini-games and
other plants. You can also just buy a ton of coins and purchase all the side
games at once (for about $3.99). The reason this is okay is that getting all
the extra stuff isn't nigh impossible - in fact it's pretty easy.

Meanwhile, over at Tiny Tower it's a chore to get anything without paying
extra unless you invest a ton of time into the game and the 'tower bucks'
aren't cheap ($30 for 1000 tower bucks which is a lot but not enough for
everything). And they are throwing ads at you for other games they make all
the time.

So, if you are going to go this freemium route it'd be nice if the choice to
stay free doesn't mean I can't finish the game without an insane commitment.

~~~
chc
I really don't see why. If you like the game enough that you very much want to
finish it, you probably should be paying†. For those who are money-poor but
time-rich, they do offer a free option. But if you have more money than time,
they want you to cough a little of the abundant resource up in exchange for
the scarce one. (If you have neither money nor time, I would posit that's your
real problem, not the pricing structure of Tiny Tower.)

† _I don't mean this in a moral sense, but in a "it's a reasonable expectation
and quite possibly essential to the business plan" kind of way_

~~~
takluyver
I think the complaint was about games where as you progress, the time cost
increases until even the most time-rich player isn't prepared to keep paying
it. Advertising these as 'free' is kind of disingenuous, even if it's
technically correct.

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josscrowcroft
Great post!

I'm interested in the concept of soft limits and how that fits into these
different models - I remember when our company's GitHub profile went over the
allowed number of users, and (I forget the exact numbers) it showed something
like _"Users: 7/5"_ , highlighted red.

Soft limits seem to say _"Hey, we know you're slightly over your limit, and
that's cool - but if you want to go any further, we'll need you to upgrade"_.

~~~
wensing
Very interesting. I think soft limits could be a great way to go, particularly
in situations where the users needs can change (increase) at a moment's notice
and their getting value out of the service means not hitting a roadblock that
requires them to convert beforehand. Giving value first and sinking the hook
is rarely a bad idea. :)

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MaxGabriel
Another cost to add to 'bells and whistles' is that it requires more
development time and may risk feature creep.

~~~
wensing
Yep, sounds like a recipe for startup death, doesn't it?

~~~
josscrowcroft
This was an eye-opener for me - and I think reading it has changed the
direction of my product!

~~~
wensing
Would love to hear details on that.

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wensing
While we're all here ... would be interesting to hear other examples (your own
or other startups) and where they fit in this loose classification system.

~~~
drubio
We've built a 'Cargo freemium' application to format and convert videos. We
give away daily free quotas and charge for additional quotas (if the user
can't wait for the next day or has a lot of videos).

We're still on trial and error mode on what to give away for 'free' and price
points.

At the start most users didn't even use 1/2 their free quota s. Which is both
good and bad. Good in that most 'free' users weren't putting a strain on the
servers, but it's also bad because if they were leaving half-empty (quota on
the table), there was little incentive to pay up. The other variable in the
process is that if the 'free' quota is too low, nobody is able to 'test' their
videos for free (so it's a balancing act to get average video size too to fit
in the free quota)

User acquisition and marketing has been the most problematic for us. Our
conversion for paying customers is still in the 1/50 range! If you consider
average adword clicks in-around the .30-.50 cent range, that's about 15-25
dollars to get a paying customer on average. Operating at this level the
margins are razor thin to say the least (We've tried to cut down on the
marketing costs, but bidding anything lower than that and you get little to no
traffic)

~~~
TimJRobinson
Could always try that they are able to use it completely free with a small
watermark for your site in the corner. Free advertising for you and you get
some value from your free users.

