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So is there no such thing as a freemium model for a Twilio-like web application?

• patio11 17y ago
  I don't see why you can't do freemium for applications which have non-zero per-user costs. You just have to either a) be careful with it or b) have a lot of other people's money to burn through prior to discovering your COCA and LTV. I spend rather substantially more than my rent on AdWords, to acquire users who don't have to pay me money. This is less risky than it sounds because I have a pretty good idea that a portion of them will indeed pay and that I'll come out profitable. There's also cash flow to consider. AdWords has post-pay, which is quite convenient for cash flow. Twilio, by my understanding, has you pay in advance. That is a bit less convenient. Basically, if you click on an ad today I owe Google money as of sometime in early March and then money actually leaves my physical possession to pay off my credit card sometime in early April, but I get physical possession of your money on Friday. This is pretty powerful -- it means, if Google were to offer me infinite advertising inventory, I could blow up my expenditures very quickly without needing any capital to do it. Prepaying is not nearly so fun, although since you're prepaying with a credit card you still get at least a few weeks to get the customer's money prior to effecting actual transfer of the money to pay for the services they used.