5 ms·

As a software vendor who wants to be benevolent, but not rip myself off, I really like this about Freemium: do “good” and “well” at the same time. (see links to

by 13ren 18y ago

As a software vendor who wants to be benevolent, but not rip myself off, I really like this about Freemium: do “good” and “well” at the same time. (see links to pg's "be good" at the end) But for selling software, if you were truly benevolent, wouldn't you give it all away for free? Denying people who can't pay reduces the good you are doing - doesn't it? Maybe an answer is that there's nothing wrong when people pay - because then they do get the value you created. It's only an issue when people cannot pay, and you deny them, because it's only in that case that your potential for doing good is unfulfilled. I think the latter case only happens when (1) your prices are too high for the value particular users get from your software; or (2) too high for their wallet. I think the solution to the first problem is to price your software (roughly) in proportion to the value customers get from it. E.g. "per seat" or "per server" or "volume-base" pricing does this. It's better to under-price than overprice (in reality, there's a huge range of values that customers get from a product, some get much more value from it than others - if you price too low, some get a fantastic bargain; too high, and you deny some). For the second problem, some kind of charity version is appropriate, where you give it away to someone who just can't afford to pay for the value they would get from it. e.g. student versions. In economic theory, a loan would probably be appropriate; but a gift is nicer and simpler. These problems become simple if your software actually helps people earn or save money themselves - then it's a non-issue that they can and should pay for it. essay: http://paulgraham.com/good.html http://paulgraham.com/good.html video: http://www.omnisio.com/startupschool08/paul-graham-at-startup-school-08 http://www.omnisio.com/startupschool08/paul-graham-at-startu...)

pchristensen 18y ago
Balsamiq wrote a good piece about what to do for case #2: http://www.balsamiq.com/blog/?p=382 http://www.balsamiq.com/blog/?p=382
- 13ren 18y ago
  HN discussion thereof: http://news.ycombinator.com/item?id=337821 http://news.ycombinator.com/item?id=337821
Retric 18y ago
That is an artfully done straw man argument. Freemium is about advertising not price.
- 13ren 18y ago
  Thanks for reading, but your cynicism about my motives is misplaced.
  - Retric 18y ago
    I did not intend to attack your character only your argument. It seems like few people really understand which business models work well with each type of software / service. Freemium works well when you have a huge audience that you can serve cheaply but you only provide a modest benefit to. Like over the air TV / Radio, but you also need a premium service tier. Most Movie theaters use a similar model where they make little money on the tickets and most of their revenue from the concession stands. Consultants can use the razorblades model where they will give you a free "consultation" and then charge to fix the problem. But it's hard to scale as they have limited space and high cost's for the initial transaction. So what defines a good freemuium model is having a useful second tier of service and a vary cheep to serve lower level. A good example of this would be an online resume builder with a lot of templates and a paid review service. The fact a movie theater shows movies is not their business their business is setting people up to overpay on food ditto for our online resume review system. But, the movie studio's want their cut so movie theaters need to charge for tickets even if they are not making money from this.
    - 13ren 18y ago
      My argument also wasn't intended as a strawman, so I don't really understand how your initial reply relates to my comment. Though I think we're probably just talking at cross-purposes, as I'm discussing "being good" while you're talking freemium. BTW: TV/radio is ad-supported. PayTV has apparently not worked out as a good business. Interesting your point about the cinema concession stand - though there's also student discount tickets; and "gold-class" premium seating (here in Australia, anyway).

by 13ren 18y ago

pchristensen 18y ago

Balsamiq wrote a good piece about what to do for case #2: http://www.balsamiq.com/blog/?p=382 http://www.balsamiq.com/blog/?p=382

13ren 18y ago
HN discussion thereof: http://news.ycombinator.com/item?id=337821 http://news.ycombinator.com/item?id=337821

Retric 18y ago

That is an artfully done straw man argument. Freemium is about advertising not price.

13ren 18y ago
Thanks for reading, but your cynicism about my motives is misplaced.
- Retric 18y ago
  I did not intend to attack your character only your argument. It seems like few people really understand which business models work well with each type of software / service. Freemium works well when you have a huge audience that you can serve cheaply but you only provide a modest benefit to. Like over the air TV / Radio, but you also need a premium service tier. Most Movie theaters use a similar model where they make little money on the tickets and most of their revenue from the concession stands. Consultants can use the razorblades model where they will give you a free "consultation" and then charge to fix the problem. But it's hard to scale as they have limited space and high cost's for the initial transaction. So what defines a good freemuium model is having a useful second tier of service and a vary cheep to serve lower level. A good example of this would be an online resume builder with a lot of templates and a paid review service. The fact a movie theater shows movies is not their business their business is setting people up to overpay on food ditto for our online resume review system. But, the movie studio's want their cut so movie theaters need to charge for tickets even if they are not making money from this.
  - 13ren 18y ago
    My argument also wasn't intended as a strawman, so I don't really understand how your initial reply relates to my comment. Though I think we're probably just talking at cross-purposes, as I'm discussing "being good" while you're talking freemium. BTW: TV/radio is ad-supported. PayTV has apparently not worked out as a good business. Interesting your point about the cinema concession stand - though there's also student discount tickets; and "gold-class" premium seating (here in Australia, anyway).