One of the major risks for startups is failing to (sufficiently) monetize. App developers and service providers have a variety of methods for generating revenues at their disposal, but depending on the market, competitor pricing, and customer need, struggle to generate sufficient revenue for growth or even maintenance.
Freemium
A freemium strategy focuses on growth by minimizing barriers to adoption of a compelling product. The zero entry cost minimizes the risk consumers take when adopting the new service. Yet without a solid link to premium plans and upselling, free products force companies to rely on alternative revenue streams such as third party advertising networks. Any intermediary between a business and its (potential) customers is a strategic vulnerability.
Which Free Apps and Services Would You Pay For?
There are a number of excellent apps and services that I gladly pay for when given the opportunity. As a user of unstable free services in the past, I appreciate when companies offer paid products as a welcome signal of business health and reliability. The products below all offer free access levels.
- Instapaper: This app creates remote bookmarks, easy text versions of a pages which are synchronized to iOS devices, and associated feeds. Beyond the free app, there's a paid app, and an optional paid subscription ($1/month)
- Dropbox: A great third party network drive that enables easy backups, collaborating, and even limited web publishing. It has smart local network synchronization as well as web sync and access. You get 2 Gbytes for free plus referral bonuses, and the first paid tier is $9.99/month or $99 per year for 50 Gbytes
- Basic Web Hosting: Free hosting from Wordpress, Blogger, Tumblr or Posterous is good enough for most bloggers but there's nothing quite as flexible as a self hosted blog with a domain you own and control. Hostmonster charges $5.99/month and enables up to 999 blogs. The one issue I have with Hostmonster is periodic downtime. I see my blogs go down a few times a month for as long as an hour with http://wasitup.com, a free site monitoring service
- Free Wifi: I maintain connectivity with free wifi, but I pay for optimum online which grants me access to a broad network. I believe wireless services are still overpriced and can't wait for the commoditization of bits over wireless and wifi networks. I'd happily pay $40/month (total) for fast wireless network access but most phone plans start at $70 and go much higher with surcharges and larger data limits. I don't require a voice plan, just reliable data which gives me the choice of service (Skype, Google Voice/Gizmo, etc)