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Freemium ain’t new
It’s just a new word
         Matt Brezina
      Co-founder, Xobni
      Twitter: @brezina
    mattbrez...
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
  ...
Skype 1.9B market cap
efax (J2 Com) 1B market cap         • 27B free min
  • 9,9M free users                 • 3.1B premiu...
10:1
$
$
    $
$
    $

    $
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 ...
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 ...
If you make software, you can make
         money in four ways


• Sell your stuff (Premium only)



      If you sell sof...
If you make software, you can make
         money in four ways


• Sell your stuff (Premium only)
• Sell your stuff to som...
If you make software, you can make
         money in four ways


• Sell your stuff (Premium only)
• Sell your stuff to som...
If you make software, you can make
         money in four ways


• Sell your stuff (Premium only)
• Sell your stuff to som...
If you make software, you can make
         money in four ways


• Sell your stuff (Premium only)
• Sell your stuff to som...
If you make software, you can make
         money in four ways


• Sell your stuff (Premium only)
• Sell your stuff to som...
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: channe...
When freemium makes more sense
          than premium-only

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

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

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

✓ A channel for buying users doesn’t exist
✓ Corollary: channe...
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 experie...
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

  ✓ N...
Why did we go freemium withwith Xobni?
Why did we go freemium Xobni?

  ✓ Good virality on communication
  platform

  ✓ N...
Why did we go freemium withwith Xobni?
Why did we go freemium Xobni?

  ✓ Good virality on communication
  platform

  ✓ N...
Why did we go freemium withwith Xobni?
Why did we go freemium Xobni?

  ✓ Good virality on communication
  platform

  ✓ N...
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
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   ...
Free                               Premium

                                                 Xobni
                       ...
Free                               Premium

                                                 Xobni
                       ...
Free                               Premium

                                                 Xobni
                       ...
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 ...
2. Start with more in-product upsells
    than you are comfortable with

• See what users are clicking on
• Determine whic...
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% imp...
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 lau...
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
 v...
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
    mattbrez...
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. (Freemium Summit Presentation, Matt Brezina, Xobni)
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. (Freemium Summit Presentation, Matt Brezina, Xobni)
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. (Freemium Summit Presentation, Matt Brezina, Xobni)
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Freemium ain't new. It's just a new word. (Freemium Summit Presentation, Matt Brezina, Xobni)

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This is a slide deck I presented at Freemium Summit on March 26, 2010. An exploration of existing freemium businesses, business/market conditions where freemium can make sense, and finally some lessons learned from xobni

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

  1. 1. Freemium ain’t new It’s just a new word Matt Brezina Co-founder, Xobni Twitter: @brezina mattbrezina@gmail.com
  2. 2. efax (J2 Com) 1B market cap • 9,9M free users • 1.2M premium users
  3. 3. 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
  4. 4. 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
  5. 5. 10:1
  6. 6. $
  7. 7. $ $
  8. 8. $ $ $
  9. 9. Free - the most powerful word in marketing
  10. 10. Free - the most powerful word in marketing • Freemium is a marketing strategy
  11. 11. Free - the most powerful word in marketing • Freemium is a marketing strategy • Powerful because of the “penny gap.”
  12. 12. 1. Is freemium right for my business?
  13. 13. 1. Is freemium right for my business? 2. If it is, how do I make it successful (lessons learned from Xobni)
  14. 14. 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
  15. 15. 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
  16. 16. 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
  17. 17. 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
  18. 18. 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
  19. 19. 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
  20. 20. 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
  21. 21. Is freemium right for my business? (let’s narrow discussion to freemium vs. premium only)
  22. 22. When freemium makes more sense than premium-only
  23. 23. When freemium makes more sense than premium-only ✓ A channel for buying users doesn’t exist
  24. 24. When freemium makes more sense than premium-only ✓ A channel for buying users doesn’t exist ✓ Corollary: channels for buying users are too expensive
  25. 25. 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
  26. 26. 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
  27. 27. 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
  28. 28. 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
  29. 29. How to make freemium a success (lessons learned from Xobni)
  30. 30. How to make freemium a success (lessons learned from Xobni) Paul Buchheit: advice = limited life experience + overgeneralization
  31. 31. Why did we go freemium with Xobni?
  32. 32. Why did we go freemium withwith Xobni? Why did we go freemium Xobni?
  33. 33. Why did we go freemium withwith Xobni? Why did we go freemium Xobni? ✓ Good virality on communication platform
  34. 34. 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
  35. 35. 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
  36. 36. 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
  37. 37. 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
  38. 38. Xobni Plus
  39. 39. Xobni Plus Xobni for Blackberry
  40. 40. Xobni Plus Xobni for Blackberry Xobni One
  41. 41. Xobni Plus Xobni for Blackberry Xobni Enterprise Xobni One
  42. 42. Xobni Free for Outlook
  43. 43. Xobni Free for Outlook
  44. 44. Free Premium Xobni Free for Outlook
  45. 45. Free Premium Xobni Plus Xobni Free $29.95 for Outlook
  46. 46. Free Premium Xobni Plus Xobni Free $29.95 for Outlook Xobni Enterprise $36/user/yr
  47. 47. Free Premium Xobni Blackberry $9.99 Xobni Plus Xobni Free $29.95 for Outlook Xobni Enterprise $36/user/yr
  48. 48. Free Premium Xobni Blackberry $9.99 Xobni One $3.99/mo Xobni Plus Xobni Free $29.95 for Outlook Xobni Enterprise $36/user/yr
  49. 49. 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
  50. 50. 8 Lessons learned in building Xobni’s freemium business
  51. 51. 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
  52. 52. 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
  53. 53. Over 14 in-product upsells
  54. 54. 3. Tease with data Show the user what they are missing from your premium product
  55. 55. Why should I click that button?
  56. 56. Tease with data Text
  57. 57. 4. Tie message to the user’s action If the user tells you he wants apples, don’t sell oranges
  58. 58. I clicked Video So, sell me video!
  59. 59. User clicks on autosuggest We sell them autosuggest
  60. 60. 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
  61. 61. 25% improvement on this upsell
  62. 62. 6. Not all channels are created equal (and that can be okay)
  63. 63. 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
  64. 64. Users that see a homepage with only our free product
  65. 65. Convert to premium more poorly than users who see both free and premium initially
  66. 66. 8. Free trials are the freemium business’s best friend Cost of losing X is perceived higher than the value of gaining X
  67. 67. 1B market cap 1.9B market cap 450M market cap
  68. 68. 1B market cap 1.9B market cap 450M market cap Time will tell...
  69. 69. Freemium ain’t new It’s just a new word Matt Brezina Co-founder, Xobni Twitter: @brezina mattbrezina@gmail.com

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