Reposting my comment from TC: I’m not convinced that Premium (or even Freemium) works all that well for most consumer products. Sure, there’s a few home runs,

Reposting my comment from TC: I’m not convinced that Premium (or even Freemium) works all that well for most consumer products. Sure, there’s a few home runs, but on the whole, the numbers are just very hard to squeeze any money out of. 10% is a very high conversion rate. Typically, any Freemium (or plain Premium) product will have somewhere around 1% conversion rate. Let’s say you do really well and bring in 100′000 new potential users every single month (quite an achievement for any website, I’d say). With a 1% conversion rate, that’s 1′000 new paying users a month. Consumers, however, typically aren’t very keen on paying much more than a few dollars a month (when they’re willing to pay a subscription at all, which is rarely) – let’s say they’re ok with paying $60 a year. That’s $5 a month. So with that insanely high amount of incoming users, you’ll have a cumulative income adding $5k a month. That’s assuming there’s no attrition (good luck with that). Not much to celebrate. At that rate, assuming no attrition, it would take you 20 months before you even make $100k/m. With attrition, it’s fair to assume that consumers won’t stay for even that long, so actually you’ll stabilise around $25-50k/m. This is not too shabby for a lifestyle business, but if you’ve taken €1m of funding, that’s not really an option. Then again, the funding wasn’t from VCs, so maybe that’s ok. There are always exceptions, things that hit a sweet spot and make crazy amounts of money from consumers. But those are very few and very far between. Can you think of any?