Freemium ain't new. It's just a new word. (Freemium Summit Presentation, Matt Brezina, Xobni)

Freemium ain’t new It’s just a new word Matt Brezina Co-founder, Xobni Twitter: @brezina mattbrezina@gmail.com

efax (J2 Com) 1B market cap • 9,9M free users • 1.2M premium users

Skype 1.9B market cap efax (J2 Com) 1B market cap • 27B free min • 9,9M free users • 3.1B premium min • 1.2M premium users

Skype 1.9B market cap efax (J2 Com) 1B market cap • 27B free min • 9,9M free users • 3.1B premium min • 1.2M premium users LogMeIn 450M market cap • 300k premium users • 27M total registered users

Free - the most powerful word in marketing

Free - the most powerful word in marketing • Freemium is a marketing strategy

Free - the most powerful word in marketing • Freemium is a marketing strategy • Powerful because of the “penny gap.”

1. Is freemium right for my business?

1. Is freemium right for my business? 2. If it is, how do I make it successful (lessons learned from Xobni)

If you make software, you can make money in four ways If you sell software to a business, they don’t want you to make money the last two ways

If you make software, you can make money in four ways • Sell your stuff (Premium only) If you sell software to a business, they don’t want you to make money the last two ways

If you make software, you can make money in four ways • Sell your stuff (Premium only) • Sell your stuff to some of your users (Freemium) If you sell software to a business, they don’t want you to make money the last two ways

If you make software, you can make money in four ways • Sell your stuff (Premium only) • Sell your stuff to some of your users (Freemium) • Sell other companies’ stuff (Advertising) If you sell software to a business, they don’t want you to make money the last two ways

If you make software, you can make money in four ways • Sell your stuff (Premium only) • Sell your stuff to some of your users (Freemium) • Sell other companies’ stuff (Advertising) • Sell users’ stuff (Data marketplace) If you sell software to a business, they don’t want you to make money the last two ways

Is freemium right for my business? (let’s narrow discussion to freemium vs. premium only)

When freemium makes more sense than premium-only

When freemium makes more sense than premium-only ✓ A channel for buying users doesn’t exist

When freemium makes more sense than premium-only ✓ A channel for buying users doesn’t exist ✓ Corollary: channels for buying users are too expensive

When freemium makes more sense than premium-only ✓ A channel for buying users doesn’t exist ✓ Corollary: channels for buying users are too expensive ✓ Premium-only competitor is creating demand

When freemium makes more sense than premium-only ✓ A channel for buying users doesn’t exist ✓ Corollary: channels for buying users are too expensive ✓ Premium-only competitor is creating demand ✓ Your product has (or needs) network effects

When freemium makes more sense than premium-only ✓ A channel for buying users doesn’t exist ✓ Corollary: channels for buying users are too expensive ✓ Premium-only competitor is creating demand ✓ Your product has (or needs) network effects ✓ Cost to offer free service isn’t too high

When freemium makes more sense than premium-only ✓ A channel for buying users doesn’t exist ✓ Corollary: channels for buying users are too expensive ✓ Premium-only competitor is creating demand ✓ Your product has (or needs) network effects ✓ Cost to offer free service isn’t too high ✓ You can get $ to build free product

How to make freemium a success (lessons learned from Xobni)

How to make freemium a success (lessons learned from Xobni) Paul Buchheit: advice = limited life experience + overgeneralization

Why did we go freemium with Xobni?

Why did we go freemium withwith Xobni? Why did we go freemium Xobni?

Why did we go freemium withwith Xobni? Why did we go freemium Xobni? ✓ Good virality on communication platform

Why did we go freemium withwith Xobni? Why did we go freemium Xobni? ✓ Good virality on communication platform ✓ No existing cheap paths to buy Outlook users

Why did we go freemium withwith Xobni? Why did we go freemium Xobni? ✓ Good virality on communication platform ✓ No existing cheap paths to buy Outlook users ✓ Low marginal cost per user

Why did we go freemium withwith Xobni? Why did we go freemium Xobni? ✓ Good virality on communication platform ✓ No existing cheap paths to buy Outlook users ✓ Low marginal cost per user ✓ Access to VC funds

Why did we go freemium withwith Xobni? Why did we go freemium Xobni? ✓ Good virality on communication platform ✓ No existing cheap paths to buy Outlook users ✓ Low marginal cost per user ✓ Access to VC funds ✓ We didn’t want to sell enterprise software

Xobni Plus

Xobni Plus Xobni for Blackberry

Xobni Plus Xobni for Blackberry Xobni One

Xobni Plus Xobni for Blackberry Xobni Enterprise Xobni One

Xobni Free for Outlook

Free Premium Xobni Free for Outlook

Free Premium Xobni Plus Xobni Free $29.95 for Outlook

Free Premium Xobni Plus Xobni Free $29.95 for Outlook Xobni Enterprise $36/user/yr

Free Premium Xobni Blackberry $9.99 Xobni Plus Xobni Free $29.95 for Outlook Xobni Enterprise $36/user/yr

Free Premium Xobni Blackberry $9.99 Xobni One $3.99/mo Xobni Plus Xobni Free $29.95 for Outlook Xobni Enterprise $36/user/yr

Free Premium Xobni Blackberry $9.99 Xobni One $3.99/mo New mobile & email Xobni platforms Plus Xobni Free $29.95 for Outlook Xobni Enterprise $36/user/yr

8 Lessons learned in building Xobni’s freemium business

1. Survey! One huge advantage of free - you’ve got a lot of users to talk to Decisions we made because we understood our users: • Deployed by IT? Our policy doesn’t allow deployment without Xobni Enterprise • One or multiple computers? Extra Xobni plus licenses are $9.95

2. Start with more in-product upsells than you are comfortable with • See what users are clicking on • Determine which upsells convert to sales • Improve or remove

Over 14 in-product upsells

3. Tease with data Show the user what they are missing from your premium product

Why should I click that button?

Tease with data Text

4. Tie message to the user’s action If the user tells you he wants apples, don’t sell oranges

I clicked Video So, sell me video!

User clicks on autosuggest We sell them autosuggest

5. Obviously, A/B test • High volume in freemium businesses makes a/b testing more important than ever • We got 50% improvement in premium conversion by a/b testing our in-product upsells and messages

25% improvement on this upsell

6. Not all channels are created equal (and that can be okay)

7. Users conditioned to free product convert poorly to premium • Existing free users converted poorly when we launched premium • New users that only see Xobni Free when installing convert poorly

Users that see a homepage with only our free product

Convert to premium more poorly than users who see both free and premium initially

8. Free trials are the freemium business’s best friend Cost of losing X is perceived higher than the value of gaining X

1B market cap 1.9B market cap 450M market cap

1B market cap 1.9B market cap 450M market cap Time will tell...

Freemium ain’t new It’s just a new word Matt Brezina Co-founder, Xobni Twitter: @brezina mattbrezina@gmail.com

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Freemium ain't new. It's just a new word. (Freemium Summit Presentation, Matt Brezina, Xobni)

by Matt Brezina on Mar 30, 2010

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Freemium ain’t new. It’s just a new word. (Freemium Summit Presentation, Matt Brezina, Xobni) — Presentation Transcript