Post on 13-Aug-2015
description
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Freemium: A Guide for Startups
March 2013
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Freemium is a Double-Edged Sword
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Freemium Requires Training
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The Freemium Experts
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Six Freemium Lessons
1. Start with the Product
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1) Start with the Product: Solve Pain
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1) Start with the Product: Both Free Users and Paid Customers Want Value
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Six Freemium Lessons
1. Start with the Product
2. Know Your Customer
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2) Know Your Customer: How Complex is Your Product?
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2) Know Your Customer: Is Free Attractive?
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Six Freemium Lessons
1. Start with the Product
2. Know Your Customer
3. Free Users Should Add Value
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3) Free Users Should Add Value: Free Users Convert To Paid Customers
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3) Free Users Should Add Value: Free Users Attract Paid Customers
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3) Free Users Should Add Value: Increasing Value and Viral
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Six Freemium Lessons
1. Start with the Product
2. Know Your Customer
3. Free Users Should Add Value
4. Make Sure the Math Works
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4) Make Sure the Math Works: Market Size
How many users do I need?
Annual Revenue Target $100,000,000
Annual Recurring Revenue Per Customer $100
Implied Paid Customers 1,000,000
Lifetime Conversion % 3%
Implied Free Users 33,333,333
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4) Make Sure the Math Works: ROI
Revenue Per Free User > Costs Per Free User
$70 = Revenue Per Paid Customer $1.00 = Product/Service Costs Per Free User
3.0% = Conversion % From Free to Paid $0.50 = Support Costs Per Free User
1.5x = Viral Factor $0.50 = Marketing Costs Per Free User
$3.15 = Revenue Per Free User > $2.00 = Costs Per Free User
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Six Freemium Lessons
1. Start with the Product
2. Know Your Customer
3. Free Users Should Add Value
4. Make Sure the Math Works
5. Love Your Cohorts
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5) Love Your Cohorts: Measure
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5) Love Your Cohorts: Improve
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Six Freemium Lessons
1. Start with the Product
2. Know Your Customer
3. Free Users Should Add Value
4. Make Sure the Math Works
5. Love Your Cohorts
6. Go Beyond Freemium
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6) Go Beyond Freemium: Sales is Not the Enemy
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6) Go Beyond Freemium: Free Trials Work Too
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Conclusion: The Six Lessons
1. Start with the Product
2. Know Your Customer
3. Free Users Should Add Value
4. Make Sure the Math Works
5. Love Your Cohorts
6. Go Beyond Freemium
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Questions / Suggestions
Jules Maltz, IVP
jmaltz@ivp.com
Thank You!