Using ‘Free’ to Turn a Profit

I suppose I'm now the moral equivalent of a freemium service. There is a free trial available. I never disparage the goal of, ultimately, making my customers happy and in return accepting their money. There is a price staring you in the face from the moment you arrive at the front page.

I think a lot of people sort of fall into freemium because they are hesitant about charging people money. Don't be. Don't chase after customers who don't pay money for stuff -- if you don't pay money for stuff, don't chase after yourself, find a niche which does pay money for stuff. Solve their problems. Get paid for it, like everyone else who solves their problems.

Incidentally, I sort of like OSS for being a friend catcher in the support of a paid-for project. (Note that this is very different from the usual "We'll OSS it and then create a premium version of the same thing, then viciously compete against ourselves for customers and mindshare" strategy.)

[Edited to add: Incidentally, to get to ~2,000 paying customers I had to attract substantially in excess of 100k free trials, although the web version now converts much better (2.07% or so). Since they cost me essentially no marginal effort no marginal cost beyond advertising, I'm totally OK with that. If they were paying monthly I'd be sitting pretty!]

It seems odd to contrast 37signals against open source. They don't release all their software as open source, but they do a fair bit and seem to have generated a lot of PR out of it.

If anything they're poster-boys for building both a business and a community by open sourcing elements further down their stack.

It is an insane amount of work to create a product better then the paid versions, then add in extras that go above and beyond for a fee. Once you start bringing on people, you have to start working to keep them happy, while also trying to build those extra features. In a perfect world a person would have funding to do that but for most startups funding is not available. I have yet to see a funded startup pull something like that off either.

That is basically what we're doing with Stormpulse.com.

FWIW I reason there are many more unprofitable freemium startups than profitable; just have not been around long enough to exhaust all their funding. They likely picked Sampa because its cooler to say "ex Microsoft employees tried and failed", and because they don't read HN.