OnDemand WTP Pricing Research

Going Freemium – One Year Later | MailChimp

On September 1st, 2009 we announced that MailChimp was going freemium. On that day, we had 85,000 users. Now, slightly more than a year later, we have more than 450,000 users. We grew our user base five times in one year.

Earlier this month, we actually doubled our freemium plan from 500 subscribers to1,000 subscribers. So now, even more people can take advantage of MailChimp’s powerful email marketing and social features. We had been averaging around 30,000 new users per month (about 1,000 per day), but since we increased the freemium plan this month, we’re seeing +2,000 new user days.

Another thing that’s increased dramatically since going freemium is the number of lunches I’m invited to; seems entrepreneurs and VCs really want to “pick my brain” about how freemium is doing for us. Usually, it’s because they think freemium might be that silver bullet they’ve been searching for. It can be, but you’ve really gotta be careful not to point that bullet at yourself…

Years of Pricing Experimentation

Here’s another piece of history. Ever since inception, I’ve been fascinated with the art and science of pricing. I’ve tinkered with pay-as-you-go and monthly plans for $9, $9.99, $25, $49, $99.99 and so on. We’ve changed our pricing models at least a half-dozen times throughout the years, and along the way we tracked profitability, changes in order volume, how many people downgraded when we reduced prices, how many refunds were given, etc. We’re sitting on tons of pricing data. When we launched our freemium plan in 2009, you betcha we used that data to see what would happen if we cannibalized our $15 plan.

If we had started with freemium at ground zero, the story would’ve been different. Here’s what I mean…

There’s a lot of number crunching and analysis that goes along with freemium. But if anybody out there thinks this was motivated by some kind of competitive business or marketing or pricing strategy, I’m sorry to disappoint you: we just did it for fun. If it’s not fun, what’s the point, right?

Read complete article here:

Going Freemium: One Year Later.

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