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Succeeding with Freemium - Sean Ellis
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Succeeding with Freemium - Sean Ellis

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In recent years freemium has become a leading startup business model. Startups use the pricing model to disrupt existing categories or to prevent a future competitor from disrupting them. But …

In recent years freemium has become a leading startup business model. Startups use the pricing model to disrupt existing categories or to prevent a future competitor from disrupting them. But freemium is a difficult model to execute and requires a unique growth strategy. In this session, Sean will share lessons learned from helping to launch and/or grow 15 freemium businesses that are now collectively worth billions of dollars.

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  • Highly defensible growth engine Requires unique culture (not common in established companies – startups malleable)Not easy to execute – today we’ll talk about best practices.
  • Product driven – free has to be good enough to create evangelists; paid needs to be noticeably better…
  • LogMeIn examples…Intended use case – free remote access creates need for paid version to print remote doc (especially if app doesn’t exist locally)Unintended use case – 2 problems… 1) setup time consuming 2) fear of re-accessSkype example – free conf – join via phone…
  • Minimum feature set to solve key problem
  • Transcript

    • 1. Succeeding with Freemium
      Sean Ellis
      July 14th, 2011
      Founder & CEO of CatchFree
      Blog: Startup-Marketing.com
      Twitter: @SeanEllis
    • 2. Competing Against Free…
      Hope nobody discovers free guy?
      Spend heavily on marketing?
      HBR “counter with free version”
      2
    • 3. Agenda
      Path to Freemium
      The Freemium Loop
      Freemium culture is critical
      Free/paid breakdown
      Marketing a freemium service
      3
    • 4. 2003 - 2007
      4
      Entrenched 800 lbs guerilla
      Great product/marketing
      Disrupt/diff with freemium
      Cashflow positive growth
      $1B-ish on NASDAQ
    • 5. Google Search Volume 5 Years
    • 6. 6
      Xobni
      Dropbox
      Eventbrite
      Lookout
      Socialcast
      2008 - 2009
    • 7. The Freemium Growth Loop
      7
      Reinvest
      Premium Upgrade
      Seed a
      Free User
      Get word-of-mouth free users
    • 8. Freemium Culture
      Least recognized necessity
      Passion to spread “experience”
      Patience to seed
      Freeloaders are good
      Protect culture – greed kills growth
      8
    • 9. Free/Paid Breakdown
      Free Version
      Premium Version
      Experience creates evangelist
      Evangelists drive growth
      Build relationship
      Free creates need for premium
      Understand needs
      Solve problems with premium
      9
      Experience
      Relationship
      Understand
      Solve
    • 10. Free is the MVP
      Lowers complexity barrier
      Lowers support cost
      More version differentiation
      10
    • 11. Marketing Freemium
      Promote free version
      Evangelists for free version
      Revenue per 100 users
      Allowable acquisition cost (less marginal cost)
      11
    • 12. The Freemium Growth Loop
      12
      Reinvest
      Premium Upgrade
      Seed a
      Free User
      Get word-of-mouth free users
    • 13. Channel Discovery
      Works with freemium economics
      Addresses skepticism
      Leverage good-will asset
      Seeds freemium growth loop
      13
    • 14. 14
    • 15. Sean Ellis, Founder & CEO
      CatchFree.com
      Blog: Startup-Marketing.com
      Twitter: @SeanEllis

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