We use the freemium model with our time tracking/pm/billing app Paymo succesfully. I don't think the model is finished, it really has great potential BUT it's not a magical formula that works everywhere.
The way we do it with Paymo is that we offer basic functionality for free to people who can't afford the software at that point in time. (eg: someone who just starting freelancing). In time some of these users convert to paying customers.
The major problem developers face at the moment is the huge availability of "free" - some users just assume that they are entitled to free software no matter what. You really need to provide real value and have your users perceive this value in order to make money.
At the moment we have a bubble forming with huge amounts of cash poured into businesses that will never ever earn any real cash and i think it will pop pretty soon. This creates a lot of problems both short and long term which we'll have to deal with.
The console and pc video game industry makes plenty of money just by charging for their software. I think App developers need to stop this race to the bottom thats killing everyone. I guess its fueled by this idea that on the internet the number of users is paramount to everything. Which I think is a silicon valley culture thing that seems like its going to cause or has caused a bubble.
I'm not necessarily disagreeing with you, but you mention the gaming industry; I thought I'd point out the biggest new development there is giving away the games for free and charging for items, aka. F2P (Valve/TF2 is one example. They increased their revenue 12x[1]).
Somehow people seem to have forgot along the way that value != money. I am a huge fan of people doing things just because they are useful without worrying about how they are going to try and monetise them, but just because something is useful and used by masses of people doesn't mean that the network of people that use it is easily monetisable, especially after the fact.
It seems that people just looked at the number of users and assumed that because a company can get millions of users, that the people working there must be bright enough to work out how to get loads of money out of them eventually, while forgetting that you don't need to be that smart to get millions of users when you are providing a useful service for free.
[+] [-] joelrunyon|13 years ago|reply
1) Ridiculously Useful
2) No Comparable Competition
3) Has A Tie-In Factor That Makes Any Power User EVENTUALLY Pay (and be more than happy to).
[+] [-] janlukacs|13 years ago|reply
The way we do it with Paymo is that we offer basic functionality for free to people who can't afford the software at that point in time. (eg: someone who just starting freelancing). In time some of these users convert to paying customers.
The major problem developers face at the moment is the huge availability of "free" - some users just assume that they are entitled to free software no matter what. You really need to provide real value and have your users perceive this value in order to make money.
At the moment we have a bubble forming with huge amounts of cash poured into businesses that will never ever earn any real cash and i think it will pop pretty soon. This creates a lot of problems both short and long term which we'll have to deal with.
[+] [-] EwanToo|13 years ago|reply
This will always be true, no matter the business model involved.
[+] [-] benologist|13 years ago|reply
[+] [-] typaldos|13 years ago|reply
[+] [-] wavesounds|13 years ago|reply
[+] [-] jmitcheson|13 years ago|reply
Is this just not another form of freemium?
[1]https://www.google.com.au/search?q=tf2+f2p+revenue
[+] [-] legulere|13 years ago|reply
[+] [-] ktizo|13 years ago|reply
It seems that people just looked at the number of users and assumed that because a company can get millions of users, that the people working there must be bright enough to work out how to get loads of money out of them eventually, while forgetting that you don't need to be that smart to get millions of users when you are providing a useful service for free.