Here’s a twist on the popular freemium business model:
First do the “mium”, then do the “free”.
First prove that people are actually willing to pay for your product by building and selling the paid (”mium”) product. You don’t have to acquire a ton of customers, just a handful so you can say, “Hey, maybe we’ve got a business here.”
Then make the “free” version of your product and use it as a marcomm tool for your paid product. The free version is obviously good for word-of-mouth, conversion, SEO, lock-in, et cetera.
I think the reverse freemium model makes sense when the mium product is substantially different than the free product. I know at least one company that is taking this approach. Use the comments to let me know where else you think the reverse freemium model applies.
This is the “miumfree” business model. Or “reverse freemium”. Or something. Please suggest a better name in the comments!
I think this is probably the most efficient form of marketing. We are very close to doing this in the enterprise software space. It is one disruptive way to compete against traditional software vendors.
I suggest fee-to-free
Nivi, to what category(ies) of products might you see this applying?
Could you consider it a punishment of sorts for early adopters?
Just speculating… might experience some dissonance from the group that paid after it goes free; you’d have to plan some mitigation.
-R
Isn’t it really paymium vs. freemium, where an overly basic free model really doesn’t play much of a roll as a stand alone offering if you don’t start with it?
Premium + Free = Pree?
Or Pee?
Isn’t this what the Eclipse foundation has really become? It seems that IBM very successfully examined all the functionality that they had which wasn’t differentiating when compared with competitors and made it open-source. …and I think most of the major contributions to Eclipse follow this principal.
Perhaps an example of this idea is where an enterprise software as service company, which has sales, makes a common, but highly defined element available as a 2.0 offering (hat tip Vineet Shinha above, lovely insight). One reason for doing this might be to advertise the basic concept that your SAAS company is selling as an enterprise product, i.e. a neat way of socialising the concept which might be not only new to the enterprise sector, but also new-to-the-world-categories.