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Comment by yosho | Hacker News Reader

The main problem I have with the Freemium model is the same problem I have with the advertising model, both require a large userbase before any substantial revenue can be made.

I wonder if anyone has done a study on the Freemium model vs the Free Trial model and see which one generated more revenue.

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Both the Freemium model and the Free Trial model require a lot of people at the top of the funnel. Speaking from what I've heard from friends (Squarespace, Harvest, etc.) who use the Free Trial is that they require the same amount of users at the top of the funnel as the Freemium model. The main difference is that they only have to support 1 version of their web app instead of a segmented free and paid version. This means you don't have to think about segmenting features, supporting free users, etc.

One reason a freemium model might be a good choice is if your free users might convert somewhere down the line. For example, if you use Dropbox you use more storage, and thereby move toward the paid option as you become more engaged. Free trial services run the risk of rejecting users who might become real customers given enough time to become dependent on your service.

Interesting point about needing the same number of people for the funnel. We're actually in the middle of transitioning one of our sites from Freemium to Free Trial because we feel like we're leaving too much on the table. As a small company, it's definitely a bonus to bring in the same amount of revenue and have lower costs due to less overall customers.

I looked at your profile, are you refering to theweddinglens.com?

Yeah, we actually just revealed the new plans on Friday.

Exactly, the bigger difference is that free users will always be using your resources (servers, bandwidth, support) while trial people after 30 days is out.

You just have to balance the cost of those users with what they bring to the table: network benefits and viral benefits.

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