On September 24, 2009
The Real Cost of Freemium
Chris Anderson’s book Freemium has caught a lot of attention in the high tech and media industries. When your marginal cost of goods or services is virtually zip, the idea that you could have all the customers you want by giving away product or services to a large group and converting a small portion to paid premium offerings sounds like the marketing silver bullet. Only, as I’ve been hearing from a number of companies in this arena, it isn’t. Not that they’d say following the business model has been a mistake. But the mathematics of converting enough customers from free to fee is far from certain and a mistake can be precarious.
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