Establishing Fees for Freemium Features

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Robbie Kellman Baxter asks and answers what features should be free and what should be paid in a freemium subscription?

I get asked all the time what features should be freemium (aka free forever) and what features should go behind the paywall.

The answer is, of course, it depends.

But here are some useful frameworks.

Does your business model depend on VIRAL MARKETING?

If your “free” subscribers are a marketing channel for attracting paid subscribers, you might want to invest in making your offering attractive for free subscribers.

Does your business model depend on a NETWORK EFFECT?

If your free subscribers create value for your paying subscribers, simply by participating in your network, and are part of the product, you might think of your investment in features for free subscribers as part of your product development investment. This could be through their content, through their data, or even through their eyeballs.

Does a significant percentage of your freemium subscribers predictably CONVERT to paid?

If your free subscribers are your best acquisition channel, that’s a good reason for continued investment from your lead gen budget.

There are some other things to consider as well.

Have you ALREADY offered the feature for FREE?

Many businesses launch with generous free offerings, planning to “monetize later”. This can be an effective way to build community or to beat competitors in a land grab situation. However, when you build a trusted ongoing relationship by giving stuff away for free, you might be building an expectation, an implied commitment, to giving it away for free forever. It can be very hard to put something previously available for free behind a paywall.

Key points include:

  • Later monetization
  • Lost leaders
  • The top guiding principle

Read the full post, What Features Should be Free and What Should be Paid in a Freemium Subscription?, on LinkedIn.