Can giving away a product or service for free, actually send sales soaring? The Freemium debate is heating up and this new survey from iYogi Insights offers you a ringside view on how people are adopting Freemium. iYogi Insights is a research initiative launched by iYogi to help understand the issues that people face with technology and how they adapt tech solutions to enhance their lives. A subscriber base that is among the largest in the tech support industry gives iYogi a unique vantage point to observe how technology is impacting people's lives and habits. Frequent interaction with this wide database of subscribers gives us a privileged peek into how people are forging a partnership with technology, sorting out the occasional issue, and on the whole, positively embracing technology to empower themselves.

1. Freemium Survey Report
CONSUMER ADOPTION OF FREEMIUM
INSIGHTS PRODUCTS AND SERVICES

2. Give it away for free, make money!
42% customers pay for products/services after experiencing them.
Key Findings
1. Freemium is the way for introducing new types of products and services for communication,
entertainment, music, productivity, and cloud applications.
2. 100% respondents have experienced Freemium offers for at least one product or service.
3. 42% users pay for products/services after experiencing them.
4. Users new to the product or service provide higher conversions after using the Freemium offer. This
is true for almost every category covered.
5. 39% of customers have experienced a free one-on-one consultation with experts, ranging from
Energy Savings, Lasix Surgery, Nutrition and Fitness, to Career and Life Coaching.
6. For nearly 60% of respondents, iYogi tech support is their first experience of a Freemium one-on-one
free consultation service with a technology expert.

3. 100% 42%
respondents paid for
of all respondents products/services after
have used a Freemium experiencing them
service or product
First-time users more
58%
experienced a first
Detailed likely to convert!
Increase in conversion
rates for first-time users.
with iYogi for a free
one-on-one consultation
with a technology expert
Findings
Freemium is ideal for
an Experience Good* 39%
have experienced free 1-on-1
consultations with experts
in Energy Savings, Lasix Surgery,
Nutrition & Fitness, etc
*Experience Good - a service or a product that needs a period of use before the customer can determine the value they can derive from it.

4. Free is the decision-maker
42% customers pay for Freemium products/services
after experiencing them
The Internet has led to the launch of a wide range of products and services that
are pioneering in nature and scope. Consequently, a new category has emerged:
The Experience Good - a service or a product that needs a period of use before
the customer can determine the value they can derive from it.
Most Internet products or services fall into this category. People don't honestly
know they need the product or service until they try it. And asking customers to
pay for something they can't put a value on is a no-brainer. However, offer it to
them either for a certain period or introduce a free offering that allows them to
unlock its value and you're likely to find it easy to convince them to buy. As our
research shows, your confidence in your product to be able to offer it for free,
speaks volumes in its favor.

5. Free is the only way to scale
100% of all respondents had used a Freemium
service previously
Pioneering products have to use a Freemium model if they want to achieve large
volumes. Usage and experience is everything. The way to get a million people to
pay is to get a billion people to begin using your product. Then, it's easy.
Since Free adds another conversion step to your revenue path, you need to
create a bigger market to have enough people who will be paying you at the end
of the day.
Evernote is a great example of a value-based product where the customers opt
to get locked in as they unlock the value of the product in their lives. Most convert
in order to use the service on multiple platforms and for other premium features.

6. First-time users more likely
to become believers!
Surprisingly, of those who tried the Freemium service, first-time users delivered a
higher degree of conversion. This applies to almost all the categories covered
under this research.
The difference between conversion rates for first-time users and respondents
who had already experienced the service ranged from 20% for Productivity Tools
to 10% for Security products and 9% for Cloud-based services. Back-up services
saw up to a difference in conversion of 8%; Security experienced a difference of
10%; Image-sharing saw a difference of 5%.
New-age games saw more than a 100% increase in conversion for first-time
users; Movie subscription services saw a rise of 8%; New concepts such
genealogy services experienced an increase of 4% and VOIP services cranked
up a higher conversion of 5%.

7. Types of Freemium offerings
Currently Freemium products come in different shapes and sizes. Value-based
Freemium products such as Dropbox allow customers to experience a free
product and as they realise its advantages, they opt to pay for it with certain
exclusive benefits added.
Characteristic-based Freemiums like LinkedIn and SlideShare offer an excellent
restricted-features service for free and for high-end and intensive users, they
offer a Pro version with advanced features and unrestricted access.
Free trial period based Freemiums such as CyberScrub demonstrate the
powerful value of the offering through time-based trials and thus convert
customers from free to paid. Cross-subsidies that offer a free product with other
complementary paid-for products are yet another kind of Freemium.
An Experience Good needs the powerful persuasion of the Freemium model to
convince customers and clinch the deal. No one can speak so eloquently for the
product or service as the product or service itself.

8. A new kind of Freemium
is catching on!
Nearly 40% respondents experienced
free one-on-one consultations with experts
In fields other than Tech Support, 'Free' is catching on. 40% respondents have
already experienced Freemium one-on-one consultations with experts from
diverse fields such as Energy Savings, Lasix Surgery, Nutrition and Fitness, and
Career and Life Coaching.
It’s only a matter of time before other one-on-one expertise and consultation-
based products and services catch on to the great ‘Freeway’ that is opening up.

9. Freemium experiences a first
Nearly 60% experienced a first with iYogi for
a free one-on-one consultation with a technology expert
iYogi is the first time nearly 60% respondents have experienced this new kind of
Freemium a one-on-one advice session with an expert. A clear indication that
any pioneering service not only benefits from Freemium but needs it for
customers to appreciate the nuances of the service. Also, the Freemium model
indicates a huge self-confidence on part of the product or service that the
customer is quick to latch on to. No one could survive if they gave away a sub-
standard offering. And that's the catch.
The Freemium Hall of Fame is filled with exceptional products and services that
genuinely offer superior value to the users. That's why they keep coming back
and finally are happy to pay. Happy to pay! That's what makes Freemium much
more than a marketing strategy it's a philosophy of confidence and self-belief.

10. Creating Happy-To-Pay customers across different categories!
Freemium: The category expander
Entertainment rules!
Movies/Video experienced the highest
number of conversion of up to 65%
Entertainment is still King! An overall conversion of 57% with
individual brands reaching conversions of up to 65%, means our
respondents take their fun time seriously. NetFlix and Hulu were
among the brands included in the survey.

11. Creating Happy-To-Pay customers across different categories!
Freemium: The category expander
Cloud has a bright future!
41% conversion for Cloud-based services
The Cloud is catching up fast. Even though it's new and Cloud-
based services could seem a debatable investment, the trend is
clear; people are increasingly willing to pay for cloud-based services
with individual brands reaching highs of 45% and 56% conversion
among respondents. The advantages perceived by these adopters
are worth the fees that these services charge. MS 365 and Zoho
were among the brands included in the survey.

12. Creating Happy-To-Pay customers across different categories!
Freemium: The category expander
Performance aids command cash
34% conversion for Productivity Tools
Respondents proved that customers are willing to pay for products
that help them optimize time and effort with an individual brand
reaching a high of 91% conversion. Clearly, convenience is a prized
advantage. Evernote and Memonic were among the brands
included in this survey. Evernote has a Pro offering that offer usage
across multiple platforms along with other premium features.
Memonic describes itself as the world's best clipper. It is also one of
the few services to offer students discounts in a far-sighted strategy.

13. Creating Happy-To-Pay customers across different categories!
Freemium: The category expander
Security depends on the user
In the Security category, while 100% had
experienced a Freemium security product,
37% were willing to pay for it.
In this age of viruses, scamsters and identity theft, people are
concerned about security. Even with excellent free products,
people are still willing to pay for a better grade of security.
Individual brands enjoy up to 57% conversion among
respondents. Clearly, the days of complete reliance on standard
free offerings are a thing of the past. AVG and avast! were among
the brands included in this survey.

14. Creating Happy-To-Pay customers across different categories!
Freemium: The category expander
Sweet notes of success!
Music service cranks up 30% conversion
Music is the savior of our times. Fitness routines, travel, work
focus, are all enhanced by music. No wonder music services
drummed up an overall 19% conversion among respondents with
individual offerings reaching 30%. Pandora and Spotify were
among the brands included in this survey. Spotify for example, has
a paid offering that starts at $4.99 per month and allows
subscribers to create playlists, share their music and videos,
among other things.

15. Creating Happy-To-Pay customers across different categories!
Freemium: The category expander
Communication is always in!
VOIP services experienced up to 41%
conversion
Communication is becoming critical for work and at home as
businesses expand and people move across the globe for better
career opportunities. Clearly voice and video conferencing caters
to a need that isn't going away. Especialy with businesses taking
advantage of technology to expand their footprint across
geographies and time zones. Skype and Vonage were among the
brands included in this survey.

16. Creating Happy-To-Pay customers across different categories!
Freemium: The category expander
Innovation stays ahead!
Pioneering services enjoy 44% conversion
New concepts flourish on fillips from Freemium. The free model
allows customers to appreciate the value they offer. Genealogy
pioneer, Ancestry is a great example of a successful new-age
service, with an offering that starts at $12.95, and goes up to $35
per month. Experience Goods such as Ancestry and LinkedIn
were among the brands included in this survey.

17. Creating Happy-To-Pay customers across different categories!
Freemium: The category expander
Data is prized!
Back-up services attract up to 46%
conversion
It's the era of Big Data. People want to keep all data and
information safe and secure. 35% of respondents are willing to
pay to keep it so, on an average with individual brands reaching
highs of 42% and 46%. Mozy and Carbonite were among the
brands included in this survey. Carbonite offers plans starting at
$59, going up to $229 per year. Mozy starts at $5.99 and goes
up to $9.99 per month.

18. Creating Happy-To-Pay customers across different categories!
Freemium: The category expander
Games convert more than one in every four
Games achieve a conversion of up to 26%.
New gen smartphones, iPads, tablets and netbooks have given
rise to a new kind of gamer. Expectedly, new-age games
attracted high conversion rates of 26% among respondents.
All those millions of iPads and smartphones have, no doubt,
fuelled this craze for Fruit Ninja, Shark Dash, and the like.
Angry Birds and Words with friends were among the brands
included in this survey.

19. Creating Happy-To-Pay customers across different categories!
Freemium: The category expander
Image and videos sharing convert nearly one-fourth users
24% conversion for image and video
sharing services
Fuelled by digital, the click-happy gen rules! A whole new tribe of
shutterbugs are avid patrons of image galleries and video sharing
sites. Little surprise then, that these services drew a conversion of
24% among respondents. Flickr and Shutterfly are among the
brands included in this survey.

20. Freemium, here to stay!
If it can't 'sell' for free, can it ever sell at all? Freemium will probably
become the new means of benchmarking products and services.
Freemium has all the hallmarks of a new From online publishing to musical bands,
marketing religion - 'conversion' of different products and services have
customers into believers and a mystical taken to Freemium and are experiencing
doctrine that actually advocates giving its benefits.
away the product or service for free to
Authors and gurus like Seth Godin and
see sales go through the roof and fill the
Paulo Coelho swear by 'Free' and bands
pews to bursting!
like Nine Inch Nails have experienced its
Brands such as Dropbox, Evernote, largesse, ensuring that it spreads across
Ancestry, SlideShare, CyberScrub and categories, to offline from online, and
iYogi, among a host of others, actually re- across media and geographies.
invent the Freemium model by adapting it
to the needs of their customers and to
their industry, service and offering.

21. Methodology
The rise of the Internet combined with pioneering technology innovations
is bringing a new kind of product and service into our lives.
The rise of the Internet combined with Services seeks to understand how the
pioneering technology innovations is average American uses and relates to
bringing newer kinds of products and new-age technologies. The survey was
services into our lives. These are the kind conducted on iYogi subscribers through
of services that are difficult to appreciate an online form following their support
without some degree of actual usage, in sessions.
order to understand the value they are
able to offer their users. A total of 2002 respondents filled the
online survey form consisting of 5
The more radical these goods and detailed questions regarding previous
services are, the more they need to be experience of Freemium offers, usage of
experienced in order to be understood by Freemium products/services under
users. Called Experience Goods, such different categories, Freemium
goods and services have given rise to a experience details and their choosing to
new marketing pricing strategy called opt for the paid version or not.
Freemium.
The data collected was then collated,
This iYogi Insights survey of Consumer analyzed and compared to identify,
Adoption of Freemium Goods and assess and quantify trends and patterns.
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