Home Leadership Turn Archives Me RampUp Solutions  
 

  • Categories

  • Archives
 

If the Shoe Fits: Freemium for Enterprise Doesn’t Pay

by Miki Saxon

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

5726760809_bf0bf0f558_mIf you doubt those words, just take a look at the difference between Egnyte, and Box and Dropbox.

Founded in 2007, Egnyte never offered free anything, has taken only $62.5 million (nearly half of that in 2013) in funding and says it will be profitable by year-end.

Box and Dropbox are not even close, with their millions of over-hyped, flavor-of-the-last-few-years hypergrowth users who pay nothing.

Nada.

Consumers used to pay, too, when the service was viable enough.

Angie’s List started in 1995 as a paid subscription service and boasted a 73% renewal rate in 2015.

In 2008 the mantra of hypergrowth exploded, driven by the the fremium model, but converting free users to paid turned out not be all that easy.

Many companies are now trying to sell their multi-million consumer products to corporations and are learning, to their chagrin, that corporations don’t care about freemium, let alone the media hype that drives consumer adoption.

Matt Weeks spelled it out perfectly in a guest post on NTR’s blog that’s well worth your time.

…hypergrowth without a hope of unit economics that lead to profitability has always been a fool’s errand (…) at some point there must be a path to profitable and repeatable unit economics.

Put more simply, the real goal of your startup is sustainable profit.

And there’s always Marc Andreessen’s advice, which really rules out the ‘free’ in freemium.

Marc Andreessen has two words of advice for startups: Raise prices. (…) The No. 1 thing — just the theme and we see it everywhere — the No. 1 theme with our companies have when they get really struggling is they are not charging enough for their product. It has become absolutely conventional wisdom in Silicon Valley that the way to succeed is to price your product as low as possible under the theory that if it’s low-priced everybody can buy it and that’s how you get the volume.”

Don’t bemoan it; own it.

Image credit: HikingArtist

Leave a Reply

RSS2 Subscribe to
MAPping Company Success

Enter your Email
Powered by FeedBlitz
About Miki View Miki Saxon's profile on LinkedIn

Clarify your exec summary, website, etc.

Have a quick question or just want to chat? Feel free to write or call me at 360.335.8054

The 12 Ingredients of a Fillable Req

CheatSheet for InterviewERS

CheatSheet for InterviewEEs

Give your mind a rest. Here are 4 quick ways to get rid of kinks, break a logjam or juice your creativity!

Creative mousing

Bubblewrap!

Animal innovation

Brain teaser

The latest disaster is here at home; donate to the East Coast recovery efforts now!

Text REDCROSS to 90999 to make a $10 donation or call 00.733.2767. $10 really really does make a difference and you'll never miss it.

And always donate what you can whenever you can

The following accept cash and in-kind donations: Doctors Without Borders, UNICEF, Red Cross, World Food Program, Save the Children

*/ ?>

About Miki

About KG

Clarify your exec summary, website, marketing collateral, etc.

Have a question or just want to chat @ no cost? Feel free to write 

Download useful assistance now.

Entrepreneurs face difficulties that are hard for most people to imagine, let alone understand. You can find anonymous help and connections that do understand at 7 cups of tea.

Crises never end.
$10 really does make a difference and you’ll never miss it,
while $10 a month has exponential power.
Always donate what you can whenever you can.

The following accept cash and in-kind donations:

Web site development: NTR Lab
Creative Commons License
This work is licensed under a Creative Commons Attribution-NoDerivs 2.5 License.