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The Price of Free

THE PRICE OF FREE What's the Freemium Economy All About? Some things in life are indeed free. But for a small fee, you can upgrade to something even better. At least that's the basic principle of the freemium model, a hot phenomenon in the cloud-run small business world. How does its economy work and what makes it so popular among businesses and consumers alike? FREE What Exactly Does Freemium Mean? Free Freemium Freemium, a term combining "free" and "premium," is a marketing model based on the idea of charging absolutely nothing for a basic product or service. Premium How Does It Make Money? e Ratings BUY APP If users want premium or full versions with advanced functionality and added value, they pay a fee to upgrade. Notable Companies That Have a Freemium Model "The easiest way Search to get 1 million people paying is to get 1 billion people using." Bearch Google Apps . Ratinga FREE $10.00/month in Linkedin 000 Ratings FREE $99.95/month SlideShare 000 Ratings FREE $249.00/month Angry Birds .00 Ratings -Phil Libin, FREE $0.99 CEO of Evernote Evernote 0000 Ratings FREE $5.00/month S Skype . Ratings FREE $4.99/month Dropbox Price of highest premium upgrade FREE $19.99/month .000 Ratings What Are Users Willing to Pay For? Ongoing, sometimes unlimited, service Add-ons Support Greater data storage Now let's take a look at free-to-play social online games (like Angry Birds), as an example of a successful freemium adoption. Freemium Game Apps Generate More Bucks Than Paid Game Apps Mobile analytics company Flurry found that freemium game companies-those that allow players to join and play for free but are dependent on revenue from virtual currency and goods-have seen a higher profit than paid games. Revenue Generated Among U.S. App Store Top 100 Grossing Games Percent of revenue from freemium games Percent of revenue from paid games 2010 39% 61% 2011 65% 35% The Freemium Sales Funnel Awareness The opening of a freemium sales funnel is relatively large compared to the traditional funnel. Why? First, the basic product or service is free, so leads will immediately notice. Secondly, social media marketing helps attract consumers faster and more effectively. Download/Sign Up Once prospects enter the funnel, consumers are given the option of either downloading or-in the case of Saas products-signing up for the service. The easier the steps, the more willing potential customers will be. Use Users become familiar with the product, including its capacities and limitations. Because users of freemium content aren't forced to pay, transitioning into the next stage can take time. Purchase Users become paid customers when they upgrade to the premium version. Advocacy During this last stage, the effect of word-of-mouth marketing is revealed in the satisfied users who talk positively about the product or service and invite their peers to try it out, as well. This in turn will lead potential users back to the "Awareness" phase of the funnel. Why Customers Like the Freemium Model Pacoword Ratings +FREE 1. It costs nothing. 2. It allows testing. 3. It's just right. 4. Simplicity. Simply put, people like the principle of "free." And the truth is, over the years, many have grown accustomed to accessing a lot of online content without having to pay for it. With free services, users can test and become familiar with an otherwise unknown Most consumers have only basic needs and are perfectly The process to start using a freemium product or service is easy and quick. Usually, the product works on a wide variety of platforms so all the customer would have to worry about is downloading or signing up for the free service. Luckily, many freemium businesses also have short tutorials on the site to explain satisfied with the free product. If they later become interested in the more features that freemium businesses offer. At the same advanced features, they'll have already had the opportunity to try the core product. time, if they did want to start paying for the premium upgrade at any time, the option is available. how it all works. SOURCES: FOCUS.COM, READWRITEWEB.COM, BLOG.FLURRY.COM, INSIDEMOBILEAPPS.COM, AARONHOOS.COM, REUTERS.COM, TECHCRUNCH.COM, WINDOWSITPRO.COM, VENTUREBEAT.COM, mavenlink ZDNET.COM, ENTREPRENEUR.COM, FORBES.COM, FASTCOMPANY.COM

The Price of Free

shared by ColumnFive on May 22
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Some things in life are indeed free. But for a small fee, you can upgrade to something even better. At least that's the basic principle of the fermium model, a hot phenomenon in the cloud-run small bu...

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