VCs Don't Want to Pay For Things, Either

In these days of Web 2.0 services that rely on quick customer adoption, the strategy has become so common that VCs have coined a term for it: freemium.

Nothing new here; “give away” the handle to sell the razor blades, etc. Despite the time-tested nature of the strategy, I have no doubt we'll hear how this “freemium” talk signals the peak of a bubble.

One wrinkle I'd like to add. The strategy of having a free, and useful, version complemented by for-pay upsells is far more effective, in my opinion, than offering users time-limited access to the full thing. At the very least, it keeps lightweight, non-paying users around until such time as they need the advanced features of the for-pay versions of the product.

It seems to be working for companies like 37signals.


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