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The CFO View Of The Freemium Model | Forbes

As the CFO of a company with the word “free” in the name, FreeConferenceCall.com, you might be surprised to learn I’m not a big fan of the freemium business model. While the strategy has short-term value as an awareness and customer acquisition tool, I believe it has too many inherent flaws to be considered as a foundation for long-term business success. To be clear, when I say freemium, I’m not including free trials. I’m referring to the two-tiered pricing strategy that offers customers a stripped-down product for free and charges them to access additional features.

This strategy is popular with technology startups because it’s an incredibly effective way to build awareness and acquire customers quickly without investing in marketing or a sales force. And there are some widely covered success stories out there: Spotify, Dropbox and MailChimp among them. But, for me, these examples only serve to illustrate the drawbacks of the model, including difficulty in conversion, high infrastructure costs and the long ramp time to revenue.

The Importance Of Knowing Your Unit Economics

As a financial executive weighing in on your company’s pricing strategy, the key is understanding the value you bring to the market and how well it aligns with every potential pricing model.

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The CFO View Of The Freemium Model.