To be or not to be… Freemium

When I was first thinking about setting up a business I touched briefly on the concept of Freemium.

Now that I am underway with my new business it is now time to give it serious thought.

There are a wide array of articles in relation to freemium, and to boil them all down – there is no one right or wrong way – as always it depends on a number of factors.

Mailchimp for example spent 8 years refining their product and pricing before they felt confident a Freemium offering would be beneficial. While companies like Dropbox, Evernote and Slack embraced Freemium from the beginning and the majority of their success is based on their Freemium model.

That said, businesses that target markets above 100 million, can be quite happy with 1% conversion rates as 1 million paying customers can generate an extremely healthy business.

My general feeling is that it is extremely important to truly understand what customers value in your product before embarking on a Freemium journey. This need not take eight years like Mailchimp, but really understanding and your market for a period of time prevents the guesswork associated with launching Freemium from day one.

Also you don’t need to be worried about not launching, you can always introduce Freemium when the time is right.

This quote from a recent article I read encapsulates my current thinking:

“If implemented right, Freemium can be a long-term revenue driver for businesses. However, this can only be realized by measuring metrics that showcase this strategy’s impact over time.”

Freemium: Playing the Long Game

Freemium is definitely something I want to explore in the future but in the first instance I want to measure and understand value. That said, I will have a Free Trial Version so that at least allows potential customer to access the product before committing.

Business Lessons

October always seems to be a month of reflection for me for a couple of key reasons.

Firstly on a deeply personal level October is the month my mum was born. Unfortunately she left us all too soon over 8 years ago but October is a month full of amazing memories.

Secondly, October is the month Cadimage was formed and so I also think back to a major part of my life and career.

A year ago I wrote a series of posts on the Cadimage Story.

Today I’ve decided to post a few of the lessons I learnt during my time.

I’ve created a page so you can keep track as I post them.

Check back soon for my first post.

New iPad Air

Last night in between cooking dinner I checked out Apples latest event – and then just now watched the bits I missed.

As had been telegraphed the launch included the new iPad Air.

It is now over 10 years since I wrote about the original iPad when it was first launched.

The evolution of the product over this time has been amazing to see and the sheer power of the device is something to behold. The new A14 Chip in this latest iPad has some [almost] unbelievable specs and the fact that it works with Apple Pencil 2 opens up a world of opportunities for this mid-level device.

It is incredible to think that on average over 50 million units have been sold each and every year since it was first launched.

While I haven’t given up my laptop yet, I know many people who regularly use an iPad as their main computing device.

I remember when it was launched initially and the amount of criticism that both the product itself and the name received.

I won’t be buying an Air just yet – but the blue one does look pretty sharp!

Running [another] 1,000km

Last year I ran 1,000km in a year for the first time. This year I decided to do it again. I find running a great time to think away from everything else. I also haven’t had a lot of work this year so I’ve been setting a few other goals along the way

Including:

  • Running a half marathon a month (4 out of 8 achieved to date)
  • Running 200km in month – this one was quite tough

With these other targets my overall milage has increased and sees me completing the 1,000 four months earlier then last year.

Making a start…

Quite often things take longer then expected! But today marks the official start of something new.

Ive been trying to get something off the ground for over 12 months and after a few misguided attempts today marked the incorporation of a new business.

We’ve got a lot ahead of us before we’ll be in a position to talk about it but it is a great feeling to have my own business again.

Today marks the point where various prototypes from the last 6 months get put to the side and we start development of what will hopefully be v1 of our product.

Getting started is always a hump to get over, but while we have lots of challenges ahead of us as we begin to build a new business from the ground up, we now have a single minded goal and focus to aim at.

The B1M – 1,000,000

Great recognition for the work the team over at The B1M are doing with an amazing milestone reached recently:

The B1M becomes the first construction YouTube channel to reach one million subscribers

Wow! Thats a great achievement – congratulations Fred and team.

In Fred’s words, he

“loves construction and wants the whole world to love it too”

Fred Mills

Well 1,000,000 is a good first step!

Architizer

While I’m figuring out what to do with myself I am looking for inspiration in a number of places.

I have some ideas forming and its probably not surprising they are architecture / building industry focused.

I have tried to think outside of the industry to see if what other opportunities there might be but I keep coming back to architecture like some sort of homing beacon.

The Architizer Website is a great resource and I also follow them on instagram as well.

I’ve found there 17 Awesome Apps for Architects and Designers page a place I return after first seeing it a couple of years ago. It is great to see the apps that people are creating but I also use it to see if there are any potential gaps that I might be able to fill.

I can see a couple and am starting to explore and prototype some things to see where this may lead.

The posts on the Architizer instagram channel also provide some very useful inspiration and generate a lot of thoughts around some of my ideas.

What Platform?

This is a tougher question for me as there is no clear cut answer and the ideas I have are spread across all platforms – web / phone / tablet / desktop. All platforms have different pros and cons and also require different development skills.

I’ve been developing web based apps for over 20 years. The original ARCHICADselect Website was powered by early ASP and SQL Database. This evolved over time and became a whole front and back office system integrated with accounting, support, payments, subscriptions.

More recently I have been learning iOS development with Swift and SwiftUI. This has certainly been fun and has been great to see some early ideas come to life on my iPad – even if they are very primitive!

When considering platforms I’m also coming back to business models like subscription and freemium.

Freemium is where you have a Free Version and a [paid] Premium Version of the software. The general idea (and the details should be a post on themselves) is that the Free Product is a marketing Tool to capture as many users as possible and then convert a number of these to paying customers.

A key consideration with regards to Freemium is the “cost to serve” that is, how much does it cost to serve each freemium user. There are many businesses that have failed purely due to the excessive costs associated with supporting their ‘free’ users.

A fairly simplistic view admittedly is that free customers on a “web based” system will have costs that can increase significantly as the number of customers increases. While a piece of software installed on a users iPad has a very margin cost to serve which (should) stay under control with large volumes.

This is not the only consideration but an example of how different platforms can have different affects. Like I say Freemium is a strategy in itself and I’d be jumping the gun a little to be deciding my business model detail without first knowing what I am developing.

In short, this is one area I still need to give considerable thought, though based on some prototypes to date I can at least reduce the options to web or iPad – or ultimately maybe a mix.

Subscription Based

For those of you who know me or are readers of this blog you’ll know I have a passion for creating business models based on recurring revenue – the majority of my consulting projects have been based on this aspect of business.

While Salesforce is generally credited with making Subscription based Software / Software as a Service mainstream, the last 20 years have seen

In the architecture space all the major players have introduced Subscription licensing either in parallel or as a replacement for perpetual based licensing. Cadimage was the first in the world for ArchiCAD and I then went on to lead the GRAPHISOFT SE Introduction of Subscription Worldwide.

Subscription businesses build revenue over the long term so have high cash requirements during the short to medium term. However, the pay off, if executed well, can be very rewarding.

Another advantage is that the cost to get started can be very low if based on a monthly model. This is not to say that sales are or will be easy – value still needs to be delivered at any price – but having a fee based on a period of time reduces risk for the customer.

The flip side of this is of course the ability for customer to stop paying if they don’t see value. Therefore the sales process for a subscription business continues long after the initial purchase.

As a person who has always had a customer centric mindset I see subscription models and the associated customer journeys as compliments to the overall strategy.