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October 26, 2013

Freemium

by Adam Famularo

Try and Buy or Freemium business models are one of the fastest growing ways of distributing and selling software today – thanks in large part to apps that are sold or distributed through app stores and land on mobile devices.

There are two key parts to think about when adopting a Try and Buy model:

Try – need to get  your offering out in front of as many people as possible.  This offering should have limited features or functions that can be unlocked at a future time – preferably through some type of eCommerce mechanism.  The success of your program is dependent on the number of trials distributed and then used in the marketplace.

So how do you get mass distribution of your product?  Outside of spending millions on traditional marketing activities, you need to think about what complimentary items that you can bundle your software with to get mass adoption.  For example, bundling security software with Internet Service Providers or Hardware Manufacturers.

Buy – need to make it very easy for the end customer to be able to purchase add-on technology or capacity.  The best way for this to be done is within the software.  So if you are providing a product with limited functionality, then you show the extended features and have them grayed out – with a call to action to unlock by clicking here and paying X amount of money.  If the product is based on a cap in user capacity or a duration in time, then make sure at the end of such point that a user can easily unlock the additional time or capacity through an eCommerce mechanism.

So why would a partner help you to mass distribute your software?  There are usually two reasons, 1. the add-on product makes their offering more valuable to their customers.  2. the partner receives a percentage of compensation for each product sold through the distributed trials.

When selling B2B software, it is important to capture the user information when they sign up for the trial so a tele-sales based model can be used to call the user and work through the technology with them to ultimately place an order.

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