Getting the most out of Freemium

[ladyeag]

Hi fellow Growth Hackers

The Freemium monetization strategy is getting more popular with every year. My team and I have brought to life a lot of freemium products, mostly mobile apps and SaaS. And we believe from our own experience when it comes to freemium there is no limit to perfection. It's a never-ending process full of experiments and data analysis. And the main goal here is to find the perfect balance between paid & free features of your product.

So let's figure out common types of limitations in a product and how to make the right choice while going freemium.

Building a gate ​

The unique mix of free and paid features is what makes freemium so popular. One can use your product without paying but with limits. There are 3 kinds of freemium limitations out there:

• functional. A premium unlocks new features. Examples: YouTube Premium (offers ad-free viewing, offline watching, watching videos in the background, etc.), Tinder (the swiping is unlimited, and you also get super likes, boosts, and other neat things).
• quota limitation. You can use the product for free up until you reach a certain quota. Examples: Dropbox (storage space quota), Slack (limited number of integrations, messages).
• support limitation. A rare format for the b2c sector, it's more of an enterprise-level thing, often associated with OSS-projects (nginx, SphinX, MongoDB, RHEL, elastic, и т.д.). The software is distributed for free, the premium gets you extensive support from the team of developers.

Hiding things behind the paywall 🛣​

Poor limits and features set can lead your business to the fail. Your users will use your product without paying at all or won't use it altogether.

Here are a few things to remember before setting limits:

1. Make sure your products is great. Recommendations will be your bread and butter, so you better make it worthy of telling a friend about;
2. Prepare to have a lot of not paying users (and be okay with that). You should be able to afford to have a conversion rate about 5% and still be successful;
3. Target a decent market. Remember recs from the first point? So it doesn't work that well when your product is offered for a specific niche;
4. Make sure your product requires frequent use. If it's something one needs once in a blue moon, they're not going to run into the limitations and you...you'll go broke
5. It's much more painless to make a "premium" feature available for free than to take a free feature away;
6. Your goal is to maximize retention and service usage. If you have a large user base and plenty of sessions, monetizing it shouldn't be a problem. Just try not to choke the user with the limitations;
7. And the final one — always experiment! It's the only way to make things better.

Our growth story ​

We held a lot of experiments recently and one took our app to the next level. In the nutshell, we made a single feature free and raised both — retention (by 60%) and conversion (by 15%). Awesome, right? We've posted the whole story with graphs and analytics. Please feel free to check it out Feedback is always welcome!

Have you experimented with your freemium businesses? How did it go? Please share your stories ️

 

[lalue]

@ladyeag Great story. Thanks for sharing