While we're all here ... would be interesting to hear other examples (your own or other startups) and where they fit in this loose classification system.
We've built a 'Cargo freemium' application to format and convert videos. We give away daily free quotas and charge for additional quotas (if the user can't wait for the next day or has a lot of videos).
We're still on trial and error mode on what to give away for 'free' and price points.
At the start most users didn't even use 1/2 their free quota s. Which is both good and bad. Good in that most 'free' users weren't putting a strain on the servers, but it's also bad because if they were leaving half-empty (quota on the table), there was little incentive to pay up. The other variable in the process is that if the 'free' quota is too low, nobody is able to 'test' their videos for free (so it's a balancing act to get average video size too to fit in the free quota)
User acquisition and marketing has been the most problematic for us. Our conversion for paying customers is still in the 1/50 range! If you consider average adword clicks in-around the .30-.50 cent range, that's about 15-25 dollars to get a paying customer on average. Operating at this level the margins are razor thin to say the least (We've tried to cut down on the marketing costs, but bidding anything lower than that and you get little to no traffic)
Could always try that they are able to use it completely free with a small watermark for your site in the corner. Free advertising for you and you get some value from your free users.
I've had similar experiences with AdWords. It's very tough to get a decent ROI. Plus, toying with it is a real time sink, and if you want to do it scientifically, then that's even more time and effort you have to invest.
Yes - would love to hear from others and what's worked (or not).
Our company is mostly Cargo Freemium with a dose of Airbag Freemium (based on my understanding of this classification system). So that means that firms can be hybrids of this model (or at least we are). Not sure if that's good or bad, but we are profitable (non-VC backed).
Our freemium gives users full almost full access to the platform (no Excel downloads) but limits the # of profiles they view. So when they hit that limit, they're prompted to upgrade. We also prompt for upgrade after a user has logged in a certain # of times. The thought being that if you login 20 times, you're finding value in what we have so we should prompt you to upgrade. We have tweaked the limits/threshholds quite a bit.
We used to limit # of searches in addition profile views but having so many limits was confusing to users and inhibited usage (for fear of using up their limits). So we removed the search limits in most paid plans.
We primarily market to the B2B set (VCs, bankers, corporates) so our pricing is probably not the typical SaaS, i.e. it starts at $300/month. For those curious, here is our pricing which also gives a sense for the Cargo/Airbag elements to our freemium model.
We've experimented a lot with pricing, what users get in the free trial and what users are presented with when they sign up so although we've not "arrived", our changes seem to be working although I know we could be 100x better than we are. So lots to be done.
This raises an interesting question: where is the line drawn between 'freemium' and 'free trial of a non-free service'? Your mention of prompting after a set number of logins suggests that you're offering the free tier as a taster, rather than as a serious service.
It's a good point. Here is why we limit logins. We stumbled upon this actually and the instituting of login limits has resulted in incremental revenues.
One of the features of our service is a daily, real-time feed of company financings and M&A transactions. Before we had login limits, people would login every day and look at the feed but click on nothing so it would not trigger any 'usage' as we defined it. And they'd take the info presented in the feed and then go to Google and find out about the company or deal.
We were adding value to their lives else they wouldn't check daily but deriving no value ourselves. So at this point, we instituted the login limit so we could be compensated for the value we are delivering. Fortunately, many of those users have converted and are now paying us.
Of course, not everyone needs us daily so for those folks looking up a handful of company or VC or acquirer profiles, our free offering is plenty for them.
As to whether we are freemium or free trial, not sure. Think we take from both schools of thought but ultimately, irrespective of what we call it, the goal remains the same - build a product people derive enough value from that they're willing to pay for that value.
According to most of the freemium gurus, freemium and free trial are not the same thing; the former is defined as having a level of service that is free forever. Obviously free trials are by definition not free forever.
Freemium is a new word. A similar concept is 'crippleware' - you can do everything but not print. Or you can print, but it'll have a watermark. Or you can only save at certain resolutions. Etc.
I guess they would have been called freemium if the word existed then.
