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Problems with Freemium?  Can this Business Model be Saved?  See also Kachingle Premium presentation.
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Problems with Freemium? Can this Business Model be Saved? See also Kachingle Premium presentation.


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At Kachingle we are putting our powerful usage-based micropayment engine to turbocharge PC and Web App Freemium conversions.

But first we needed to fully understand the issues. Here's our take on the current state of Freemium. Feedback greatly appreciated!

Feedback welcome from Freemium App Vendors and Users!

Published in: Business, Technology

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  • 1. Problems with Freemium? Seeking feedback from PC and Web App Freemium Vendors and Users
  • 2. Can the Freemium Business Model be more Effective?
    • We think we can help by offering a new service for PC and Web Application Vendors that is based on our existing micropayment engine.
    • But, we need to be sure we understand the problem well…
    • … so, we are seeking feedback from anyone experienced in Freemium PC and Web App services either as a USER or as a VENDOR
  • 3. Freemium Best Practices
    • Offer a base-level product people want to rave about. Virality drives success.
    • Prompt user-to-user recruitment with a product that’s more beneficial when shared with others.
    • Make offering is scalable so serving each new user gets incrementally less expensive .
    • Offer a premium-level product that provides meaningful value otherwise difficult to obtain, realizing that many businesses succeed with only single-digit free-to-paid conversion rates.
    • Commit to ongoing user interaction in order to adapt and improve offerings, promote usage, inspire evangelism and prompt premium-level purchases.
    • Provide users with a reason and easy way to spread the word , recruit new users and grow your audience into one that advertisers and others are willing to pay to reach.
    Schenck, Barbara Findlay. “ Freemium: Is the Price Right for Your Company?” Entrepreneur Magazine . February 2011. < > [accessed January 10, 2012]. Great advice – but is it actually working?
  • 4. Freemium is not working for all Vendors because of…
    • Fierce Competition The free version needs to be so extraordinary that there is not enough incentive for most users to upgrade to Premium offer
    • Low Conversion Rates At ~ 1-2%, Average Revenue Per User (ARPU) is too low for sustainability
    • High Churn Rates Low Premium user retention requires a continuous stream of new users
    • Free Users don’t upgrade to premium version because:
      • too much trouble to upgrade right at that moment while the user is busy doing a real task
      • too expensive
        • the premium capabilities they need are not worth the premium price
        • total cost of all the Premium apps they would use is too expensive
        • occasional users don’t want to pay full price
      • too hard to keep track of multiple subscriptions and credit card charges
  • 5. Your Feedback Requested!
    • If you are a user of Freemium PC and Web Apps…
      • Which ones do you use and is it the Free or Premium version?
      • What do you like/dislike about Freemium Apps?
      • What would compel you to upgrade to Premium for the ones you are using the Free version of?
    • If you are a PC or App Vendor with a Freemium Offering…
      • Do you have any of the problems mentioned in the previous slide? If yes, which ones?
      • What is your conversion rate and how do you measure it?
      • Are you satisfied with your ratio of Premium/Free users?
  • 6. Contact us! for more info or to share your thoughts Cynthia Typaldos, Founder [email_address] 408.867.8875 office 650.215.8406 cell Daniel Reid, Business Development [email_address] 760.576.9928 @kachinglepreem