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The Economics of Free
in Online Businesses
Robbie Kellman Baxter
Grandma says GIVINGproduct away is risky business
But FREEseems to be everywhere
FREEfeels ubiquitous on consumer side
B2B is thinking about FREEtoo
Three kinds of FREE

limited by solution attributes

limited by duration

focus on ancillary audience
Benefits of FREE
Risks of FREE
FREEis a tactic; Profitability is the goal
Subscription
A la carte services

Sources of Revenue

Ancillary products

Partn...
CASE STUDY: Market Research Tools
Market Research Tools
Primary Customer?

Market researchers

Secondary Customer?

Consum...
CASE STUDY: Video and voice services
Video and voice services
Primary Customer

Consumer and business users

Secondary
Cus...
CASE STUDY: Restaurant reservation system
Video and voice services
Primary Customer

Restaurants

Secondary
Customer

Dine...
CASE STUDY: Digital News
Digital content creation services
Primary Customer

Newspaper readers

Secondary
Customer

Publis...
Does free make sense for you?
THANK YOU!
www.peninsulastrategies.com
650-322-5655
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The Economics of Free Trials and Subscriptions in Online B2B

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This presentation is for B2B companies that are considering offering free trials or free "lite" subscriptions of their online products or services

Published in: Business, Technology
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Transcript of "The Economics of Free Trials and Subscriptions in Online B2B"

  1. 1. The Economics of Free in Online Businesses Robbie Kellman Baxter
  2. 2. Grandma says GIVINGproduct away is risky business
  3. 3. But FREEseems to be everywhere
  4. 4. FREEfeels ubiquitous on consumer side
  5. 5. B2B is thinking about FREEtoo
  6. 6. Three kinds of FREE limited by solution attributes limited by duration focus on ancillary audience
  7. 7. Benefits of FREE
  8. 8. Risks of FREE
  9. 9. FREEis a tactic; Profitability is the goal Subscription A la carte services Sources of Revenue Ancillary products Partnership streams Aggregated analytics Advertising
  10. 10. CASE STUDY: Market Research Tools Market Research Tools Primary Customer? Market researchers Secondary Customer? Consumers Free or Freemium? Freemium offering for individual marketers Benefits of Free? Virality, Conversion, Awareness Limitations of Free? Features, Reach, Revenue Streams? Subscription, a la carte AdditionalLearnings? Need to understand early how free fits model
  11. 11. CASE STUDY: Video and voice services Video and voice services Primary Customer Consumer and business users Secondary Customer Managers Free or Freemium? Freemium as primary service offering; Free trial for admin Benefits of Free? Networked effect; Awareness, Trial Limitations of Free? No administrative services, must be online, no forwarding Revenue Streams Subscription, a la carte, credits, Additional Learnings Consumers and business users are the same people
  12. 12. CASE STUDY: Restaurant reservation system Video and voice services Primary Customer Restaurants Secondary Customer Diners Free or Freemium? Beemium Benefits of Free? Networked effect (on both sides) Limitations of Free? Free offering is ancillary Revenue Streams Subscription, product, services Additional Learnings Careful planning may create new sources of value
  13. 13. CASE STUDY: Digital News Digital content creation services Primary Customer Newspaper readers Secondary Customer Publishers Free or Freemium? Freemium, Free Trial Benefits of Free? Networked effect, awareness, trial, virality Limitations of Free? Volume of free, duration, depth Revenue Streams Subscription, platform, issues Additional Learnings Challenges when variable costs are not zero
  14. 14. Does free make sense for you?
  15. 15. THANK YOU! www.peninsulastrategies.com 650-322-5655
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