Baking DoughFreemium Lessons from the Real World

David Weekly @ SF Freemium June 14, 2012

PBwiki PBworks

• June 2005: First private wiki host! Free+ads.

• July: $5/mo -> NO ADS (unlimited users)

• 2006: $5/10/20 a month

• 2007: $10/20/35 a month

• 2008: $20/user/mo (unlimited wikis)

• 2010: $20-50/user/mo [verticalized]

PBlearnings

• A la carte pricing confusing/complex.

• “Principle of Least Surprise”, adapt w/users.

• When cheap, 100% self-service

• Consumer-to-enterprise = hard!

• ...but tool-to-solution = >100x $$$

Key Thresholds

• $5: impulse consumer buy

• $50: prosumer purchase

• $500: casual business tool

• $5k: serious business tool

• $50k: partial solution

• $500k strategic solution

Conversion Rates

• Expect 1-5% for consumer freemium.

• Evernote: can take a long time to get to 5%!

• Accumulate unique data (notes, wishlists, travel history, etc.) for longterm value.

Get Baked!

• Retention: LTCV++

• Sharing: CAC--

• Success: CAC < LTCV

• Person: become a ritual (for a group)

• Company: become a key (team) process

Conflicting Lessons

• Enterprise solutions pay well, but...

• Consumer: wider audience than ever!

• BillUser() call in all OS APIs, soon.

• Consumerization of the enterprise

Clear Lessons

• Ad inventory on mobile is atrocious.

• Exactly where payment APIs are strongest.

• In-app purchase is dominating.

• Ads overall are a poor user experience, conflicting with what the user wants.

So

• Beware ads. (other than as a stick to encourage people to upgrade)

• Retain data.

• Make purchase easy.

• Encourage sharing.

• Be useful!