Questions For Startups Killing Free Membership And Going Pay Only
marketingstartups.com
marketingstartups.com
1. What percentage of free users convert to paid users? Looking at a TechCrunch article that covered Jott, they say:
In August voice-to-text service Jott moved out of beta and added a premium feature for $4/month. Since then, the company says, about 30% of Jott’s active users have opted for the premium, no-ads version of the service.
30% seems really, really high to me, but I could be way off. But even if 30% of the free users upgraded, that leaves 70% that are gone completely. That’s 70% of the people that have heard about you, come to your site, and actually signed up to use your service.
2. What is the cost of keeping free members? Like I mentioned above, most startups would kill to keep their users, especially when they have a premium version to offer. With such a captive audience already using the product, there are great opportunities to plug the full version in every communication.
3. Are there competitors ready to take your free users? When you get rid of your free users (especially if they are frequent users of your service), they’re likely to look for another service to replace you. What if there are other services that would welcome your subscribers?
4. How will startups attract new users without a free version? Without a free version to hook new users, how do you sell users on paying for the service? A 30 or 60 day trial? If that’s the case, what’s the point of getting rid of the free users? Is it solely the ability to charge them after 30 or 60 days? Is it the simple shift from a) users that are freely using the service without offering up their credit cards
to
b) users that are using the service, but have their credit card on file, so if they forget to cancel, or think the service is ok, you can charge them
I’m not knocking the strategy. It certainly has a higher probability of making some cash, but free trial vs. freemium upgrade certainly feel like very different animals. One motivates me to check it out and bail immediately, looking for flaws and reasons to stop payment. The other makes me actually try something out at no cost, and if I feel that the service is useful, I’ll pay for it by making the choice myself.
5. Will the cost of your service be enough to be profitable? Finally, the big question: even with a high conversion rate, is the subscription charge enough to make sufficient profit without some ad component?
Some days I think of charging for usage (similar to other SaaS models), having a monthly per user flat rate, or just making the whole thing free initially until I have enough users and figure out how to monetize then (with more features, ability to add new rules, etc.)
1) A word processor provides spellcheck, grammar check, and some text enrichment aka style checking. My software provides spellcheck, minor grammar things, and very heavy text enrichment. Desktop software comparable to my text enrichment technology retails for $130. My spellchecker also detects homophones (where, were, etc.) which the Firefox spellchecker and the Wordpress spellchecker do not do.
END USER BENEFIT: checks you don't get in a word processor, improvement over the default spellcheck.
2) c+p from a word processor back into Wordpress is cumbersome. Claiming that all people follow this practice is misguided. I agree some people do this and others use standalone blog editors. However I see CMSs bringing in more and more word processor functionality as time goes on. After all, you are editing and producing content in the CMS, these tools should should be available.
END USER BENEFIT: convenience, safety net built into the CMS for those times when writers are too lazy to open a word processor
3) my engine makes it easy to add rules to enforce organizational style guidelines in writing. Imagine you have a corporate blog where many employees are producing content that the public sees. Most organizations worth their salt have a style guide. My software makes it easy to enforce style guidelines. I don't have a rule editor in place for everyone yet but my engine can support this.
END USER BENEFIT: centralized control of style guidelines, ability to enforce style guidelines
Think beyond Wordpress. Any web app with TinyMCE can use my service to embed language checking capabilities as shown in that screenshot.
(note--even though I'm building writing tools, its 6am, I've been up all night, please forgive my sloppy writing style right now)
I like how you've realized the challenge of "education your market," very strong words there, and it sounds like you have some plan put together.
I think 2) is the greatest draw, the convenience factor.
Best of luck.
People have written quality content for awhile now, agreed. They did so before the word processor too. My claim is that I will speed up the polishing process for writers using my product.
My tool is a billy club, bopping writers over the head with their bad habits. We all have them. How many engineers write "utilize" over "use". You may think, "who cares?" but read a paper where everything is said with complex words, passive voice, etc.--it gets dense.
One of my favorite books is Write to the Point by Bill Stott. He advocates concise writing to communicate ideas quickly. I breezed through his book like it was a Neil Stephenson novel. This is a testimony to the difference clear writing makes.
Sure, I'm hocking a product, but I also believe in what it does.
Conversely, and this is especially true for small startups, if you can build something for which a thousand or two people are willing to pay $20-40 / month, then that's a pretty attractive income. This could easily help you ride out the economy and be around when potential acquirers have more budget to spend, if that's your goal.
One other nice thing about this trend is it pushes focus away from marketing to the new-app-crack-babies that love to try every new thing for 5 minutes. They will give you some nice early feedback but don't really represent your target market, either in terms of demographics or loyalty.
If at all possible I would not charge for the existing free product, but instead think of new features that will be worth a premium to your top users.