Back on March 11th, I mentioned that Toni Schneider would be one of the guest speakers at the Freemium Summit held in San Francisco on March 26th. The summit focused on the freemium business model. That is, offering a free service with the chance to upgrade and that upgrade costing money. While GigaOm has a nice overview of the Summit from the various panelists, WebNewser took a keen interest in Toni Schneider’s session.
The thing that is most interesting to me is that WordPress.com does not work on a tiered model. Instead, everything is individualized à la carte style so that users can pick and choose the features they want. This enables WordPress.com to routinely release new features that they can charge for. I also like their method of only charging for the hard stuff although some would argue that editing CSS is not that hard and should be a free feature. However, you only have to hang out in the WordPress IRC channel for awhile or browse around the WordPress.org forums to see that many people have difficulty editing CSS.
A little insight into the amount of revenue Automattic makes by charging for premium features on WordPress.com.
His company now makes 40 percent of its revenue from premium services like domain mapping, with the remainder from ad sales and enterprise products. But he said the problem with this approach is customers may not know of services they could receive, because it’s harder to market them individually.
I also think some of the points raised by the commenters on the GigaOm article are worth reading. The Freemium model doesn’t work for everyone but more and more companies are going down that road. As a customer, I like companies that use this model. Generally, I get a good enough feel for the product or service throughout the life of the free version that at some point if I need an additional feature or some other value add on, I won’t have to think so hard about giving them my money. Actually, this sounds a lot like Trialware. Would that make a good comparison between the two models or are they the same thing?
