Freemium has run its course

I find it strange that this article is placing a paid model in opposition to a freemium model. Freemium is nothing more than an indefinite free trial with limitations placed on usage. It doesn't indicate that you don't want to charge for your products.

Far and away the best execution of freemium I've ever seen is Wufoo. You get a few forms for free to start using the service and can get genuine utility from the service. By the time you hit their escalation trigger, if you're genuinely getting value from the service the cost of change far exceeds the cost of subscription. If you're not getting genuine utility from the service you'll find something else. If you never hit one of their escalation triggers then you're a negligible cost to them and since all free forms advertise Wufoo when submitted, you're doing free marketing for them, which can be offset against the cost of supplying those free forms in the first place.

It's a beautifully designed freemium model and, I think, well worth studying when you're designing your own pricing strategy because it obviously works insanely well for them!

Someone should tell the games industry that freemium is dead.

I doubt that they will hear you over the sound of all the money raining down on them though.

"which unlike freemium is neither new nor a fad" Because freemium is new and a fad?

There's nothing in the article that indicates that freemium is somehow bad for your business. Just opinions of a few people. Which don't even contradict freemium. SurveyMonkey 'downplays' its free offering, not stops it. Marco Arment says you should charge for your product, since when is freemium not charging for your product?

Freemium is not something businesses do because they're ashamed of making money, it's something businesses do to gain access to a tough market.

Do you think people on the streets are handing out newspapers, soft drinks and mini-snacks for free because of charity? It is marketing. Can anyone show me sparrow would have gotten the same amount of attention with close to no marketing budget if it had only the pay-up-front version?

How many sales would they have lost to pirating if the ad-supported version was just a trial?

Freemium works, figure out what it is that is worth money to your users, and make sure people can get it for their money. Pepsi-Cola would love a way to give their new taste to so many people for free, with almost no distribution costs.

Is that not gigaom's model?

"First use the free version to drive adoption and build a large customer base, and then find ways to monetize that base by upselling the paid version and selling extras."

Gigaom gives away content for free to drive adoption, build a large base, then upsells GigaOM Pro.

Google IO before last, Google announced apps with in-app payments were making 20x conventional apps. In-app payments are mostly used for a lower friction version of freemium than forcing the users to buy a separate pro app or web site sign up account/subscription.

An interesting article, but perhaps rather heavy on assertion, and light on actual data. Would it not, perhaps, be significantly improved by quotes from publishers and developers who are engaged in both "freemium" and paid models? Hearing first-hand of what trends they're experiencing would lend more weight to the assertion that freemium is on its way out.

Personally, I do lean very much toward outright payment for a product or service - I pay for my LJ account, though free accounts are offered; the few TV shows I enjoy, I buy from iTunes, at least when they're made available; the music I listen to, similarly, I buy, rather than listen to on a subscription service that subsequently offers microscopic payment levels to the artists.

I'd never seen the Hershey's / Ferrero Rocher experiment referenced in the article (that supposedly "started the free-mania") but couldn't the opposite conclusions be drawn from the experiment? I.e. that having a free option (somewhat obviously, perhaps) reduces revenue for the vendor?

In the experiment, when offered the choice between a Hershey's Kiss at $0.01 and a Ferrero Rocher chocolate at $0.25, 50% of respondents chose Hershey's and 50% chose Ferrero Rocher - for an average Revenue Per Customer (ARPC) of $0.13. When the price of the Kiss was lowered to $0.00, 90% chose the kiss and only 10% chose the Ferrero Rocher - for an ARPC of $0.026. All things being equal, the vendor would have to have 5X the number of "sales" to achieve the same amount of revenue, and the marginal Cost of Goods Sold/Cost of Sales would have to be zero to achieve the same amount of profit.

Freemium is perfect for entertainment products where value is subjective so users need to be enticed with a try before you buy mentality.

With a B2B product, I think the best solution is a trial period to lock the user into the project, and demonstrate value over the long term before asking for money.

My understanding is that free part of freemium is a just a way to promote your product (i.e., marketing costs). I learned that people who chose free will probably never pay - however they can do a lot of work for you for free.

I'm quoted a few times in this article, but I do think freemium can work. The key is knowing if it can be profitable and sustainably so given your product and market. I recently dissected this issue in a blog post: http://wensing.tumblr.com/post/25167979206/the-anatomy-of-pr...

The problem with Freemium model is that there are many people, > 95% in my opinion, who only come for the FREE part. Less than 5% users actually pay. But you end up paying for the infrastructure costs for all 100% of the users.