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Baking Dough
Freemium Lessons from the Real World




          David Weekly @ SF Freemium June 14, 2012
PBwiki PBworks
•   June 2005: First private wiki host! Free+ads.

•   July: $5/mo -> NO ADS (unlimited users)

•   2006: $5/10/20 a month

•   2007: $10/20/35 a month

•   2008: $20/user/mo (unlimited wikis)

•   2010: $20-50/user/mo [verticalized]
PBlearnings

• A la carte pricing confusing/complex.
• “Principle of Least Surprise”, adapt w/users.
• When cheap, 100% self-service
• Consumer-to-enterprise = hard!
• ...but tool-to-solution = >100x $$$
Key Thresholds
• $5: impulse consumer buy
• $50: prosumer purchase
• $500: casual business tool
• $5k: serious business tool
• $50k: partial solution
• $500k strategic solution
Conversion Rates

• Expect 1-5% for consumer freemium.
• Evernote: can take a long time to get to 5%!
• Accumulate unique data (notes, wishlists,
  travel history, etc.) for longterm value.
Get Baked!

• Retention: LTCV++
• Sharing: CAC--
• Success: CAC < LTCV
• Person: become a ritual (for a group)
• Company: become a key (team) process
Conflicting Lessons

• Enterprise solutions pay well, but...
• Consumer: wider audience than ever!
• BillUser() call in all OS APIs, soon.
• Consumerization of the enterprise
Clear Lessons

• Ad inventory on mobile is atrocious.
• Exactly where payment APIs are strongest.
• In-app purchase is dominating.
• Ads overall are a poor user experience,
  conflicting with what the user wants.
So
• Beware ads. (other than as a stick to
  encourage people to upgrade)
• Retain data.
• Make purchase easy.
• Encourage sharing.
• Be useful!

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Freemium Meetup November 2012 - David Weekly

  • 1. Baking Dough Freemium Lessons from the Real World David Weekly @ SF Freemium June 14, 2012
  • 2. PBwiki PBworks • June 2005: First private wiki host! Free+ads. • July: $5/mo -> NO ADS (unlimited users) • 2006: $5/10/20 a month • 2007: $10/20/35 a month • 2008: $20/user/mo (unlimited wikis) • 2010: $20-50/user/mo [verticalized]
  • 3. PBlearnings • A la carte pricing confusing/complex. • “Principle of Least Surprise”, adapt w/users. • When cheap, 100% self-service • Consumer-to-enterprise = hard! • ...but tool-to-solution = >100x $$$
  • 4. Key Thresholds • $5: impulse consumer buy • $50: prosumer purchase • $500: casual business tool • $5k: serious business tool • $50k: partial solution • $500k strategic solution
  • 5. Conversion Rates • Expect 1-5% for consumer freemium. • Evernote: can take a long time to get to 5%! • Accumulate unique data (notes, wishlists, travel history, etc.) for longterm value.
  • 6. Get Baked! • Retention: LTCV++ • Sharing: CAC-- • Success: CAC < LTCV • Person: become a ritual (for a group) • Company: become a key (team) process
  • 7. Conflicting Lessons • Enterprise solutions pay well, but... • Consumer: wider audience than ever! • BillUser() call in all OS APIs, soon. • Consumerization of the enterprise
  • 8. Clear Lessons • Ad inventory on mobile is atrocious. • Exactly where payment APIs are strongest. • In-app purchase is dominating. • Ads overall are a poor user experience, conflicting with what the user wants.
  • 9. So • Beware ads. (other than as a stick to encourage people to upgrade) • Retain data. • Make purchase easy. • Encourage sharing. • Be useful!