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Freemium Strategies Create Varying Levels of Success


Building interest in a small business is harder than it looks, especially in the increasingly competitive marketplace. Keeping this in mind, small firm owners need to do what they can to set their enterprise apart from the rest, such as using effective marketing tactics.

In many instances, small businesses are offering free trials of services or allowing others to sample their products at no charge, and they are seeing varying results, reported The Wall Street Journal. The type of business often indicates whether "freemium" strategies will work. When businesses are offering their service free of charge or at a cost, they still need to write up a contract for each user and protect that contract with certain business insurance policies.

Editor in chief of Wired magazine and author of a book on the subject Chris Anderson noted that freemium is essentially a model unique to the digital age because there is very little marginal cost associated with digital goods.

When a freemium offer has worked

Cloud storage is becoming one of the most popular tools in the marketplace today with many businesses of all sizes needing an affordable place to keep all of their online files. Dropbox is one success story. The online storage solution was able to grow its base by offering a free trial for certain storage amounts. The company's network now tops more than 50 million users.

SujayJaswa, Dropbox’s head of business development, said that their free option allowed them to engage users and enabled them to boost leads that led to paid customers.

When moving away from freemium launched success

Chargify, a provider of billing-management software to small businesses, experimented with freemium offers when the firm launched in 2009, but wasn't able to generate enough revenue and was on the way to bankruptcy, so it ditched the strategy.

Instead, the company began selling its starter plan at a price point of $65, and now it has nearly 1,000 customers, demonstrating how many people used the free offering.

Co-founder and CEO of Chargify Lance Walley said he believed that the decision to ditch freemium models was the single most important decision he ever made for his business.

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