Web entrepreneurs have a difficult choice to make with the release of every new service – should it be offered complimentary to bring in streams of users and make them aware (growing the service virally) or should we charge for it with an aim of shortening the road to profitability?
While the former (freemium) might seem like the best way to go, there are many inherent challenges and, despite the continuing slow economy, people are still spending.
So why not encourage them to pay for what you’ve created from the get-go?
It’s first important to explain that a freemium is a business model that works by offering basic services for free, while charging a premium for advanced or special features.
You might think that offering a freemium would be a pretty easy decision to make. You may be right, but that doesn’t mean there aren’t challenges.
For those who are selling their products and not giving them away, this provides an opportunity to take advantage of the weaknesses of those doing so.
Those offering freemiums are forced to choose which services will be free and those consumers will have to pay for.
That presents a problem because a conscious decision has to be made on the features that will be left out.
Any mistake in the division of those features or services carries with it the potential to send consumers elsewhere.
And that’s just the beginning of the problem with freemiums.
Continue Reading: “Competing Against The Freemium”
Photo by drinksmachine.