Improving the "freemium" model

The "freemium" business model - providing a basic (and limited) product or service free, but charging for an enhanced or full-featured version - has become one of the most used business models on the Web. There's a Freemium subject listing on Wikipedia, and a Freemuim blogsite, freemium is even part of the Business Model Database.

Even though it's easy to explain, Freemium is hard to nail down. The product or service must be desirable in both free and paid versions. The free version must provide enough value to generate repeat usage, and the paid version must be that much better to generate enough subscribers to drive the whole business model. Not easy, as evident in the number of failed ventures: we review enough technologies in our monthly newsletter that the review list contains a number of "site not found" pages after a while.

But we occasionally see great freemium sites: good product, usable free service, and a great value proposition to upgrade. Here's one: Attention Wizard, an AI-driven engine that evaluates
landing pages and provides a "user" experience that can be tweaked and optimized. Since the engine is an algorithm-driven simulation (and, consequently, automated) they can afford to provide a free version. Actual results - especially in before-and-after testing of landing pages - shows significant, even spectacular, increases in conversion rates. So repeat usage is likely.

And they have made the premium versions enough better - or perhaps the free version sufficiently limited (is your glass half full or...) - that regular users will want the improved features. For example, free landing page assessments - actually sophisticated heat maps - are limited to one a day, may take a couple of hours to complete, are of lower resolution and contain a big watermark in the middle.

Premium levels, on the other hand, deliver reports in minutes, have an unlimited number of uses at a modest cost, and can be transparent...powerful incentive to sign up, then include it in your own company's package of services.

We haven't seen customer counts, revenues or any other success measures on Attention Wizard, but we have already put them in the "winners" column, based simply on their execution of the Freemium model.

Know any others that seem to have nailed down the model? Let us know.