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The Complete Guide To Freemium Business Models

The Complete Guide To Freemium Business Models
Editor’s note: This guest post was written by Uzi Shmilovici, CEO and founder of Future Simple, which creates online software for small businesses. The post is based on a study done with Professor Eric Budish, an economics professor at the University of Chicago Booth School of Business. It also includes ideas and comments from Peter Levine, a Venture Partner at Andreessen-Horowitz and a professor at Stanford GSB The idea of offering your product or a version of it for free has been a source of much debate. Pricing is always tricky. Unfortunately, many entrepreneurs don’t give it enough thought. Free is even trickier and with so many opinions about it, we thought it would be refreshing to take a critical approach and dive deep into why some companies are very successful at employing the model while other companies fail. The Law of Marginal Cost Pricing plays a huge part in competing for customers. Guess what? An Experience Good A good example is Dropbox. The Psychology of Free

http://techcrunch.com/2011/09/04/complete-guide-freemium/

Related:  Freemium monetization

Ever-Growing Evernote Hits 10 Million Users (425,000 Paying Ones, Too) May 2009: Evernote hits 1 million registered users December 2009: Evernote hits 2 million registered users May 2010: Evernote hits 3 million registered users August 2010: Evernote hits 4 million registered users November 2010: Evernote hits 5 million registered users Today (6 June 2011): Evernote hits 10 million registered users As you can tell from the numbers copied above, that means Evernote attracted about 4 million users since the beginning of this year, but more importantly, the number of premium (paying) users has more than doubled in the past 5 months (from ~200,000 to ~425,000). The freemium flaw Close your eyes, and cast your mind back to the first dotcom boom in the late 90s/early 00s. What’s your overriding memory of that whole crazy period? Or if you’re too young to really remember, what do you immediately think of when you hear dotcom bubble or dotcom boom mentioned in relation to Silicon Valley at the turn of the millennium?

Apple cult mocked by Samsung in Galaxy S II ad "I could never get a Samsung," says a self-consciously cool-looking, whiny dude, seated on the sidewalk. "I'm creative." "You're a barista," says the man standing next to him in line. This is perhaps the most touching line in what is a very creditable attempt at mocking the Church of Science-ology that is Apple. I Won’t Use Flickr Until They Release My Photo Hostages Freemium business models are always hard. You have to give users enough for free that they try your service out and get hooked. Then you hit them with fees for upgraded features that make it even better. With a perfect product people don’t mind paying because they feel like it’s good value. Flickr is a freemium service. But they have more of a hostage taking business model.

Why Education Startups Do Not Succeed I co-founded PrepMe in 2001. We were one of the first education companies online and the first purely online, personalized platform. We were acquired in 2011 by Providence Equity-backed Ascend Learning. Freemium is better than Free « Alexander van Elsas’s Weblog on n A few interesting posts drew my attention this morning. First there was Dave Winer who predicts that on-line advertisement will be dead. Not because it will completely disappear, or that it’s growth will slow down considerable. If Freemium Is In, Then Why Do Paid Apps Still Reign Supreme? Earlier today, we posted on some data from Pando Networks that shows that free-to-play online games, often overlooked in the hype around social and casual games, are growing just as fast and as furiously around the globe as their counterparts. Obviously, much of this has to do with the industry’s transition from paid to freemium models — the examples of which are numerous not only in online gaming, but for web and mobile apps on the whole — and even startups and SMBs making their way in the consumer Web. While many of us probably take the rise of freemium for granted by now, some new stats and a nifty infographic from Quixey show that we are still very much in a transitional phase.

O'Brien: LinkedIn doesn't mean we're in a bubble Skype. LinkedIn. And this week the eye-popping IPO of a Russian company, Yandex, that while dubbed the "Google (GOOG) of Russia" had kept an extremely low profile in Silicon Valley. Put them together, and this string of deals raises a provocative question: "Are we in a bubble?" No. Not even close.

Full API now available Full API now available The full Instapaper API is now available for developers. See the Full API documentation to get started. I’ve made an unusual decision for it that I’d like to explain. I was reluctant to make a full API before now for a few reasons: Peter Thiel: We’re in a Bubble and It’s Not the Internet. It’s Higher Education. Fair warning: This article will piss off a lot of you. I can say that with confidence because it’s about Peter Thiel. And Thiel – the PayPal co-founder, hedge fund manager and venture capitalist – not only has a special talent for making money, he has a special talent for making people furious. Some people are contrarian for the sake of getting headlines or outsmarting the markets. For Thiel, it’s simply how he views the world. Of course a side benefit for the natural contrarian is it frequently leads to things like headlines and money.

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