Running a freemium web app? Here's a big reason we're growing. | Hacker News Reader

Running a freemium web app? Here's a big reason we're growing.

blog.scoutapp.com

125 pointsitsderek2319 comments

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Interesting that Scout isn't actually a freemium app by a strict definition though.

At least, I can't see any free plans, only a 30-day trial.

I'm also intrigued by the difference in subscriber rates between freemium webapps and freemium webgames.

http://lsvp.wordpress.com/2008/06/09/successful-mmogs-can-se...

The numbers from there vary from about 5% to 15%.

What can freemium webapps learn from freemium games?

>What can freemium webapps learn from freemium games?

Games have some advantages that can be hard for apps to replicate; games are, in general, more social than typical applications. Games are also somewhat more enviable. When I was 11, a few friends and I played RuneScape (remember runescape?). After one of us got a paid membership, everyone else suddenly got way more interested in having a paid RuneScape membership. That is to say, if one person gets a paid membership to a multiplayer online game, other people in their social circle will probably be more likely to subscribe as well.

Taking advantage of this with a webapp would require that you provide something that someone either finds worthwhile showing off or something conspicuous enough that they don't have to. The second condition applied for Apple's iPod in the early part of the decade. It'd also probably be a good idea to offer benefits to groups of paid members as well as to individual paid members.

Yes, and games are also far more linear. "Crap. I loved levels 1-10...but I can pay $10 for levels 10-20." or "This gun is great, but if I pay, I can get ones that are way more powerful."

If you make an enjoyable product, typically you can convert interested casual users into paying customers fairly easily.

I remember RuneScape, from ads in old Dragon magazines. But I always thought it was a pen and paper game. Was it originally a P&P before going online, or were the ads simply unclear?

I'm pretty sure it was always an online game played through a Java applet. It's had a few incarnations, but overall it's still pretty similar to when it started.

> What can freemium webapps learn from freemium games?

People want to save time so that they can spend more of it -having fun-. If your app doesn't create happiness directly, save them as much time as you can so they can get that happiness somewhere else. People will pay for this.

It is really hard to notice but on this page: http://scoutapp.com/subscriptions there is note of a 30 day free plan if you look (or search) but you don't get the same kind of information as you do on the other plans.

    We also offer a 30-day free plan: 1 server, 3 plugins, and a 30 minute reporting interval.

Ummm...what is a 30-day free plan? Isn't that just a free trial?

I'm guessing it's actually a free plan, despite the "30 day trial" text. I'm guessing it's a humongous typo.

When you sign up for the priced plans the sign up form asks for credit card info and promises 30 days free. The "Free" link goes to this sign up form: https://scoutapp.com/accounts/new?subscription_id=2 which doesn't ask for any contact details, and clearly shows the price as $0.00.

Besides, I don't think the guys running Scout would refer to their service as freemium on their blog if they didn't have a free version. Their help link at the bottom of the website is also broken ( http://scoutapp.com/info/help ), which means the the website probably hasn't been tested/proofread very carefully (understandably -- there's so much to do).

@jd - Thanks for pointing out the support link. We've fixed the link on the site.

The 1% paid signup rate, like the "1% of shareware downloaders pay", is largely a non-scientific myth created to convey the general impression that "Well, its low -- 1% sounds good, let's go with that".

I do about 2.45% on my trial signups these days and I'm hardly the most successful guy at conversion optimization in the world.

Note that I quote it as a percentage of trial signups. As a percentage of visitors it would be wildly sensitive to whatever method you are using to draw visitors to your site. If, for example, you're an early-stage startup with no significant link equity but are experimenting with an AdWords campaign, it is likely that most visitors came to your site responding to an ad which told them a) what you offer and b) sign up for the free trial. Bam, high conversion rates. If, on the other hand, you're a fairly established business with lots of link equity and a developed SEO strategy, you're going to be attracting folks across the spectrum from highly motivated to looky-loos to some poor sap looking for ["Patrick McKenzie" geologist]. (He didn't sign up for my trial. Rats?)

I didn't quite understand: 1% off all his traffic, or 1% of the people who sign up for the free version?

In my experience, it is more likely to be 1% of all traffic. Usually, conversion rates are like this:

100 unique visitors => 10 free version users => 1 paid app user

Of course, this rule is true for non-web-app businesses as well. Improvements in quality increase the likelihood that customers will come back, and returning customers usually have higher margins (due to lower sales & support costs) than new acquisitions.

Taking care of existing customers increases the likelihood they will refer you to their friends, thereby generating new customers. Most businesses would do well to love and leverage their existing customer base.

Yeah this isn't freemium at all according to the pricing plans here: http://scoutapp.com/subscriptions

Evernote is a much better example of a freemium model.

Wait a minute. You're telling me that if the number of people who stop paying me goes down, I make more money? NO F'ING WAY!

Seriously, is this worth writing about? You should clearly optimize all three relevant factors (traffic, conversion rates, and retention). 1% is not set in stone, and you need only get to 1.5% to get the same 50% increase.

The point he was getting across is that a 50% increase in signups leads to a 50% increase in revenue, whereas a 50% increase in retention is a 100% increase in revenue. That fact isn't immediately obviously unless you do the math.

But it's entirely irrelevant because it may be more than twice as hard to increase retention by 50%.

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