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Why Free Plans Don’t Work

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Re: Why Free Plans Don’t Work

#51

Post by hasenj »

dagw wrote: post #19
scrrr wrote: post #7

Earlier quoted context omitted.

So the real advice is: Offer free accounts and then get rid of them.

That was basically what I took away from the article. Start by offering free accounts until you gain some sort of traction and people become aware of your product, but once you start getting significant traffic stop with the free.

Something else to take away: don't require people to give away their billing information upfront when signing up for a trial; simply downgrade their account if the trial period ends and they haven't paid yet.

Re: Why Free Plans Don’t Work

#52

Post by Tyrannosaurs »

startuprules wrote: post #45
shadowsun7 wrote: post #26

I loved this article, but after thinking about it for a bit I realize that there is an argument for going free. Two pretty strong ones, in fact. 1) If you want to get acquired - and we're talking about a big acquisition here - it would do to go free so you manage to score a big-enough user base to get noticed. And so the bigger company is interested in acquiring you not only for your technology, but also for your use…

World of Warcraft dominates the MMORPG market. Why? they created the best damn product. Go free to get lots of broke users if you want to help scammers serve ads to those users.

World of Warcraft has a couple of other things going for it though.

1) Network effects. If you've got friends who play WoW then that's a major reason for you to play it even if there is something better out there. Of course you could all move to the better thing but they won't because...

2) "Loyalty". Anything where people invest time which can not be transferred (for instance in levelling up characters) tends to incur loyalty, if only because they don't want to start over.

Re: Why Free Plans Don’t Work

#53

Post by startuprules »

Tyrannosaurs wrote: post #52
startuprules wrote: post #45

Earlier quoted context omitted.

World of Warcraft dominates the MMORPG market. Why? they created the best damn product. Go free to get lots of broke users if you want to help scammers serve ads to those users.

World of Warcraft has a couple of other things going for it though. 1) Network effects. If you've got friends who play WoW then that's a major reason for you to play it even if there is something better out there. Of course you could all move to the better thing but they won't because... 2) "Loyalty". Anything where people invest time which can not be transferred (for instance in levelling up characters) tends to inc…

Agreed. Also, there is the value perception. When players have to sort through all these MMO games to play, the paid ones stand out over the free ones. (for those players with limited time to play, and can afford to pay)

Re: Why Free Plans Don’t Work

#54

Post by damoncali »

revorad wrote: post #41
shadowsun7 wrote: post #26

I loved this article, but after thinking about it for a bit I realize that there is an argument for going free. Two pretty strong ones, in fact. 1) If you want to get acquired - and we're talking about a big acquisition here - it would do to go free so you manage to score a big-enough user base to get noticed. And so the bigger company is interested in acquiring you not only for your technology, but also for your use…

Going free also makes sense if you want total market dominance. In which case, free is really the only way to go. No it's not. The other way is to make the best damn product in the market. I hate to give cliched examples, but since we are talking market dominance, see Windows, Adsense and iPod.

I can see iPod and Adsense, but Windows? Windows won for very, very different reasons. When Windows first appeared, it was far from the best product on the market. It won because it was already everywhere (because of DOS). Microsoft practically invented the "give it away to ensure market dominance" game (Ok, slight hyperbole there). It took the court system to slow them down.

Re: Why Free Plans Don’t Work

#55

Post by blacksmythe »

damoncali wrote: post #54
revorad wrote: post #41

Earlier quoted context omitted.

Going free also makes sense if you want total market dominance. In which case, free is really the only way to go. No it's not. The other way is to make the best damn product in the market. I hate to give cliched examples, but since we are talking market dominance, see Windows, Adsense and iPod.

I can see iPod and Adsense, but Windows? Windows won for very, very different reasons. When Windows first appeared, it was far from the best product on the market. It won because it was already everywhere (because of DOS). Microsoft practically invented the "give it away to ensure market dominance" game (Ok, slight hyperbole there). It took the court system to slow them down.

I agree. I think it would be almost impossible to introduce a new, non-free OS now since from day 1 it would have to be not only better than Linux and BSD, but significantly better.

Re: Why Free Plans Don’t Work

#56

Post by gvb »

damoncali wrote: post #54
revorad wrote: post #41

Earlier quoted context omitted.

Going free also makes sense if you want total market dominance. In which case, free is really the only way to go. No it's not. The other way is to make the best damn product in the market. I hate to give cliched examples, but since we are talking market dominance, see Windows, Adsense and iPod.

I can see iPod and Adsense, but Windows? Windows won for very, very different reasons. When Windows first appeared, it was far from the best product on the market. It won because it was already everywhere (because of DOS). Microsoft practically invented the "give it away to ensure market dominance" game (Ok, slight hyperbole there). It took the court system to slow them down.

Agreed. From the point of view of the customer, Windows is free since it is bundled with their computer and cannot be unbundled. (There now are some chinks in that bundling armor, but not much.)

Re: Why Free Plans Don’t Work

#57

Post by revorad »

damoncali wrote: post #54
revorad wrote: post #41

Earlier quoted context omitted.

Going free also makes sense if you want total market dominance. In which case, free is really the only way to go. No it's not. The other way is to make the best damn product in the market. I hate to give cliched examples, but since we are talking market dominance, see Windows, Adsense and iPod.

I can see iPod and Adsense, but Windows? Windows won for very, very different reasons. When Windows first appeared, it was far from the best product on the market. It won because it was already everywhere (because of DOS). Microsoft practically invented the "give it away to ensure market dominance" game (Ok, slight hyperbole there). It took the court system to slow them down.

What consumer OS on affordable computers (that leaves Macs out) was/is better than Windows?

It took the court system to slow them down.

That was not for their dominant desktop OS, it was for using their monopoly to push IE and server products.

You can call out Microsoft on dodgy anti-competitive behaviour in some respects, but you cannot take away credit for building the solid product that is Windows. Heck, even now after goofing up with Vista, they are back with Windows 7.

Re: Why Free Plans Don’t Work

#58

Post by wolfrom »

shadowsun7 wrote: post #26

I loved this article, but after thinking about it for a bit I realize that there is an argument for going free. Two pretty strong ones, in fact. 1) If you want to get acquired - and we're talking about a big acquisition here - it would do to go free so you manage to score a big-enough user base to get noticed. And so the bigger company is interested in acquiring you not only for your technology, but also for your use…

What I take from the article and from your comments is that Freemium is a great idea for any product that relies on network effects, either to create a more useful product or to provide a strong exit. But with any other type of product, it would make sense to put the Freemium aside. It's probably easier to try paid only (with or without trials) first, rather than starting with Freemium and dealing with the fallout of cutting off free users later on.

Re: Why Free Plans Don’t Work

#59

Post by mrbird »

This is also an important consideration when trying to evaluate (and iterate on) user feedback.

The type and quality of feedback that you get from paying customers is often completely different than what you get from non-paying users. Paying customers bring higher, and more importantly, more precise expectations of how your product should work for them. If you listen carefully, they'll tell you what your product needs to be. You'll have fewer users, but you'll actually have a product, rather than a service that tries to be everything to everyone.

Re: Why Free Plans Don’t Work

#60

Post by daleharvey »

revorad wrote: post #57
damoncali wrote: post #54

Earlier quoted context omitted.

I can see iPod and Adsense, but Windows? Windows won for very, very different reasons. When Windows first appeared, it was far from the best product on the market. It won because it was already everywhere (because of DOS). Microsoft practically invented the "give it away to ensure market dominance" game (Ok, slight hyperbole there). It took the court system to slow them down.

What consumer OS on affordable computers (that leaves Macs out) was/is better than Windows? It took the court system to slow them down. That was not for their dominant desktop OS, it was for using their monopoly to push IE and server products. You can call out Microsoft on dodgy anti-competitive behaviour in some respects, but you cannot take away credit for building the solid product that is Windows. Heck, even now…

I much much much prefer desktop linux, I would hesitate to call windows decent, let alone by far the best.

Yet I have still found it as much as impossible to buy a computer without windows preinstalled.

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