The future of the web is freemium
Freemium is a type of business model that works through offering a free service or product to anyone who wishes to use it, and charging for premium service or advanced product features. The business model has been pioneered by web2.0 gurus such as SEOmoz’s Rand Fishkin, or Anthony Caselena of Squarespace (other notable Freemium businesses include Skype and flickr). Both businesses offer basic tools and services for free allowing users access to SEO tools or website building software respectively. The freemium model offers a whole load of benefits for a business, and especially a business that mainly operates online.
Benefits of the Freemium Business Model
- Create a lot of friends
By offering good quality free services/products to users you are going to attract a lot of fans. In this crazy world a free lunch is always approached with caution as the recipient waits for the catch. If the user has that lunch and there is no catch they are likely to want another free lunch and so on. They will also tell their friends, and before you know it your site will be inundated with visitors using your quality free services.
- Links, links and links
The above word of mouth phenomenon will inevitably lead to many inbound links. Using a freemium business model turns your whole business/website into one big link bait as users can’t wait to tell others about all the free goodness to be found on your site. As we know this is great for SEO and will help to attract a good set of relevant links with little viral effort on your behalf.
- Repeat Users/User engagement
The more free tools/services you offer on your site the more you can engage users and attract repeat users (assuming that the services/tools are of a high quality and relevance). This enable you to cross sell other products, or if you are a publisher to sell create valuable advertising space ( = web space where people are engaged and returning).
- Cross Selling
Once users have used your brilliant free service they may be sorely tempted to upgrade and try various premium-freemium services. After attracting and engaging the relevant traffic who are now actively using your free products you have the perfect audience to market and sell the better products to. Be careful though; you don’t want to be seen as trying to pressure or trick the user into purchasing anything.
What makes a good freemium service/product?
- Usefulness
It is vital that your free offerings must be useful and relevant for your user. For example it would be of little use for SEOmoz’s users to be offered a free Mortgage Calculator, where a MetaTag analyser would be (and is) far more useful.
- Uniqueness
If you are the first to offer such a tool, or even the first to offer the tool freely this will help to create a buzz around your business and drive more links and visitors to your site.
- Quality
If you do offer free services make sure they are quality. If they don’t work properly the freemium model is likely to work in the opposite way and put people off using your paid for product.
- Transparency
Be honest and transparent (as with all Web2.0 practices) when trying to cross-sell products. Do not offer a product for free for a limited period of time and then start charging for it. Ensure that users are fully aware that there are no catches and that they are under no obligation to purchase anything.
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