Free to Freemium: Lessons learned from YouSendIt.com

I am genuinely surprised by how many I find even years after starting my business. (And in where they are, too. All that work on the application, marketing, SEO, etc etc and the thing that pushed me over the day-job line took me all of one Saturday to implement on a lark.)

In regards to cost of customer acquisition: time you spend playing with your conversion funnel does wonders for this number and as your COCA decreases you start to have all sorts of fun options. With a price increase and a few recent lifts in conversion it is now economical for me to advertise on keywords I couldn't before at prices above where my competitors can profitably match. This results in a winner-take-most kind of situation on the AdWords auction -- good news for me (and for Google).

At the same time, I've been talking to a friend who is looking to start up a website that follows more in the footsteps of YouSendIt. We've had several conversations on whether its more valuable to offer a service for free to build market share and then suffer the pains of losing users when you switch to a paid model or charging from the beginning and seeing much slower growth. I appreciated that the article at least addressed the fear of switching to a paid model, but I would have been interested to hear how Kumaran thinks YouSendIt would have done if they would have launched with a freemium model already in place.