Just in my industry:
AVG, AVAST, AVIRA, BitDefender, MalwareBytes, SUPERAntiSpyware
All offer a non-trial/non-expiring 100% free home user version of their security software, with a more feature rich premium option available for payment.
Freemium works like gangbusters in some industries.
It would be interesting to see some numbers though. I wonder what percentage of free users upgrade to a paid version. I wonder what it costs to support the free users. I have to assume it works for them, or they probably wouldn't have lasted as a company. But, speaking anecdotally, I've used several of these products and have never felt the need to upgrade.
Also, you could make a case that these are not truly freemium, since any commercial use requires payment.
About 1% is a good estimate. At first glance you might think this is bad, but actually -- the freemium model provides boatloads of word of mouth. Even if only 1% buy - a large % of the other 99% are still satisfied and tell people, which throws more folks in the funnel and leaves the company with a large surplus of goodwill.
We have people routinely write in to us - 'Ive used your product for years and it's worked so great I just want to help contribute' and so they buy a license - just out of gratitude from years of free service and not because they are looking for any of the Premium features.
Regarding the 'cost of free users' - the cost is negligible. It's not like we write different definitions for the premium and the free - they all share the same definitions so there is not duplication of effort. Also, usually security software also acts as a 'data collector' in that it sends back suspicious files back to the lab for analysis. In this respect, having hundreds of thousands or millions of free users makes it easier to write definitions and protect all of our users because they provide us with more samples than we would of otherwise had access too. We actually ship a better product BECAUSE we have such a large # of users (both free and paying users).
Good point. I can see how a big user base would help you develop a better product in this industry.
Regarding 'cost of free users', I was thinking of support costs. Even though a user does not pay for the product, they still expect to get help when they run into trouble. And if they don't get help, that could wash away some of the goodwill they might otherwise feel.
You can get around some of the bandwidth costs by doing what AVG and others do, which is bounce 100% of downloads to download sites like CNET so that the downloads count towards bumping you up in their 'top downloads' lists -- which helps you get even more downloads moving forward.
Some companies do not offer phone support (especially not to Free users), so this limits free users support down to just tickets and forums (which can be user-moderated to a large degree). Some companies have had success bouncing free users who need support to 3rd party 'PC help' type companies who can work with the person over the phone - for a hefty fee of course, and part of that goes back to the originator as commission.
Flickr was profitable even before acquisition with a freemium model. The free version of Flickr is exactly like the paid version except with upload caps per month.
Dropbox has a freemium model and is probably profitable or on their way there.
One thing both have in common: they are basically giving away disk space. Storage costs are trivial -- we're approaching pennies per GB -- but giving away CPU time or bandwidth is a much riskier proposition.
Good examples, but I can't help feeling that there a lot of assumptions about profitability. Dropbox, for example, is a great service, I really like it. Every tech-savvy person I know uses it, but no one I know pays for it. I know this doesn't prove anything, but it makes me wonder if they are making money. Even if disk space is dirt cheap, it's still not free for them. I wonder how many paying users they need to cover the cost of all those free users.
I've typically read that they don't work. For example: http://www.softwarebyrob.com/2010/08/18/why-free-plans-dont-...