After reading the article we've made the free option less visible (www.examprofessor.com), and perhaps we'll remove it completely one day soon.
Nice article!
Why Free Plans Don’t Work
91–100 of 118 posts
Re: Why Free Plans Don’t Work
#92I 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.
Product doesn't trump all. It's the exception, not the rule, that the best product wins the war.
Besides... what is the best product? Is it the most featureful? The simplest? The fastest? The cheapest? The most usable? The most beautiful? The most enviable? The most emotionally satisfying?
And even if you know what's best... if people aren't aware of it's existence, or if there are other barriers to them trying it, they might well never accept it.
I used to think like you. Then I made some great products.
I had much better success when I started thinking about the whole picture, and stopped zeroing in on the product.
Re: Why Free Plans Don’t Work
#93Earlier quoted context omitted.
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…
Windows won because DOS was already everywhere. It wasn't the best product. I would argue OS/2 and Macintosh were pretty significantly better. It's not a coincidence that it took this long (Windows 7) for MS to produce a decent operating system - they are now having to compete on quality. But you don't even have to buy the argument that Windows was sub-par. It doesn't matter, because that's not why MS won. Just as MS…
Of course, Microsoft used DOS to push Windows and perhaps OS/2 was better in some ways, but the Wikipedia article suggests OS/2 lost because Windows was better in some important ways.
The collaboration between IBM and Microsoft unraveled in 1990, between the releases of Windows 3.0 and OS/2 1.3. Initially, at least publicly, Microsoft continued to insist the future belonged to OS/2. Steve Ballmer of Microsoft even took to calling OS/2 "Windows Plus".[9] However, during this time, Windows 3.0 became a tremendous success, selling millions of copies in its first year.[10] Much of its success was because Windows 3.0 (along with MS-DOS) was bundled with most new computers.[11] OS/2, on the other hand, was only available as an expensive stand-alone software package. In addition, OS/2 lacked device drivers for many common devices such as printers, particularly non-IBM hardware.[12] Windows, on the other hand, supported a much larger variety of hardware.
http://en.wikipedia.org/wiki/OS/2
The other question to consider is why another PC OS didn't come up to compete with DOS/Windows considering that Microsoft actually helped open up the hardware ecosystem. A dominant player with most of the "market share" need not stop a new better player (see web search). Maybe it's worth acknowledging that making a good OS is a hard problem which MS cracked better than the rest.
Re: Why Free Plans Don’t Work
#94Free plans work if they are inadequate for customers who can afford to pay, but adequate for a taste. Less Accounting does a great job of this. The only reason not to offer such a plan would be the resources it requires to support free customers, and perhaps that it has a negative price anchoring effect.
Re: Why Free Plans Don’t Work
#95The article makes excellent points all around. The #1 goal of any business is to gain positive cash flow (revenues greater than expenses). Anything else sinks your business. It's high time start-ups learned that lesson.
Sure, starting out you need to gain traction. You do that by: 1) having a superior product 2) gaining a superior rep
The only way to have a superior product is to identify your target market. Nothing in life is "free". If you want to offer a service to your clients that cost them nothing out of pocket you better be pulling in revenue in other ways (advertising or info selling). Since many are averse (privacy issues and ad-block) to those other options you must charge your user base.
Your product doesn't have to be the one with the most features, just the one whose features are the best executed.
Your product has to meet the client's needs. If you don't know who your target client is (Everybody is not an appropriate answer) then you need to refine your pitch. Part of client needs eventually comes down to support and interaction. If you spend all your resources (time, server, bandwidth, development opportunities) supporting a vast number of free clients at the expense of revenue generating clients you will quickly gain no to poor reputation.
Note: I tried to figure out what Evernote is doing. Their free service does meet the vast majority of user's needs (including mine). The amazing thing is that their service is so simple and straight forward that perhaps they don't need to spend so many resources on support and with the API (Trunk) and partnerships their development/expansion costs are now being taken on by so many other parties. I'm sure they bled cash brutally at the beginning but their product was so novel and amazing that VC money came to the rescue. Fact is that there are few start-ups in such a position. There are also few products out there so novel that users talk about not "needing to" but "wanting to" contribute to their success. Twitter? Ha! But Evernote is different. People want to pay them for their service even if they don't need to upgrade. They just love it so much. That is a truly rare and beautiful thing.
Re: Why Free Plans Don’t Work
#96I 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…
Good point on 2) total market dominance !
I wonder if Twitter would have had a chance at all if they required payment for participating (even as little as $5 a year would probably be too much for it to take off) ?
Re: Why Free Plans Don’t Work
#97I 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.
Windows was free (preinstalled) for end users since at least 3.0 IIRC. Adsense is essentially free for publishers. Both it and Adsense have huge positive network effects. Not to say that they weren't best products on the market when they got traction, but still.
Re: Why Free Plans Don’t Work
#98I 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 really think there is a missing piece of context here.
If you are creating the next social application charging for your application would be counterintuitive since you are banking on the number of users.
On the other hand if you have an application that actually makes money for someone or saves money (in other words translates to direct dollar amount) you might be better off charging as long as your user base perceives the value they get out of your application as more than what they pay for it.
I really think that me-too-free app mentality has to change. Startup founders (especially micro ISVs) need to understand the fact that coming up with a business model is the core of the business not an afterthought.
Re: Why Free Plans Don’t Work
#99Earlier quoted context omitted.
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…
Windows won because DOS was already everywhere. It wasn't the best product. I would argue OS/2 and Macintosh were pretty significantly better. It's not a coincidence that it took this long (Windows 7) for MS to produce a decent operating system - they are now having to compete on quality. But you don't even have to buy the argument that Windows was sub-par. It doesn't matter, because that's not why MS won. Just as MS…
Windows won because DOS was already everywhere. It wasn't
the best product. I would argue OS/2 and Macintosh were
pretty significantly better.
The hardware requirements OS/2 were higher, Windows had better drivers support and provided better tools for developers. And the real battle was in '94 when IBM released OS/2 Warp. In '95 it was already game over.
People weren't using OS/2 for the same reasons they wouldn't go for Win NT 4. It was technically superior, but incompatible with what people wanted.
Win 95 had the same quality as Mac OS ... both were pieces of shit that got the job done, the difference being that you could get Win 95 for a better price and that it was future-proof (Win NT was already on sale for businesses).
IMHO, with Windows Microsoft only had 2 fuckups ... Windows ME and Vista. For all the other versions Microsoft just provided what consumers wanted.
Re: Why Free Plans Don’t Work
#100If you get someone in the door, you can upsell them _eventually_. You have a long time to go. I don't know if the relationship between company and user is the same in the current mobile app marketplace.
Also, many freemium companies are actually enterprise companies in disguise, where the pricing plans really work best for larger organizations over individuals. Free users are a loss leader to enterprise sales.
Generally, I wouldn't paint with such broad brush strokes. Free can work. Free might crater for you. Look hard at your product and market when designing your pricing.