Thursday, April 3, 2008

Conversion ratio in Freemium Model

Source: http://dondodge.typepad.com/the_next_big_thing/2008/03/kevin-rose-robe.html

Pownce,Kevin's new company, uses the Freemium business model. Free to use the basic service, but pay a premium for additional services. My survey of companies using the Freemium model showed an average of 3% of users will pay for premium services. Pownce is seeing the same conversion rate, and building a profitable business.

The consensus of the panel was that advertising is a good model if you have huge traffic that can be targeted, but all businesses should have multiple revenue streams. Freemium, subscription, pay for leads, and CPA (cost per action) are the most promising business
models.

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