The Freemium business model, a popular choice among start-ups, works by offering basic services for free, while charging a premium for advanced or special features. Often, Freemium start-ups not only don’t know how they’re performing but don’t even know how to measure how they’re performing. Lifetime value is the lifeblood of this business model, so failing to understand whether they are moving the company toward success can present significant challenges.
Metrics will differ, depending on the industry and offering. For example, some industry experts say businesses need a 10% conversion rate to be viable; however, some Freemium business service companies, like publicly traded LogMeIn, are successful with conversion rates of barely 1%. Others, like Basecamp, work from 10-15% conversion rates. On the consumer side, Netflix has nearly a 100% conversion rate off free trials, while Flickr converts only 10% yet is still wildly successful.
As founder of YouSendIt, one of the first companies to offer Freemium services at scale, Ranjith Kumaran will share insight into how companies can properly capitalize on the Freemium model and explain how real Freemium businesses measure their profitability/growth. He will share the YouSendIt dashboard as a real-life example of the critical metrics a Freemium provider should monitor, including cost of acquisition, cost to serve, conversion rates and retention rates. All of these combined net out to the profitability and lifetime value (the gross revenue that a user ultimately brings in, minus the cost to serve them).
Attendees will learn:
Ranjith Kumaran is the founder and CTO of YouSendIt, a leader in web-based digital content delivery. In this role, he is responsible for overseeing the company’s product roadmap and conducting competitive analysis and has actively contributed to launching YouSendIt’s paid subscription services. Prior to YouSendIt, Kumaran worked with Verisity Design, a key provider of verification process automation (VPA) solutions, where he managed product marketing for the software tools of Access Systems. Previously, he was the director of sales engineering at Celoxica, a leading provider of C-based design and behavioral synthesis tools, where he built the company’s sales applications and established its engineering team. Kumaran also was a software systems engineer at Red Hat, one of the largest and most recognized companies dedicated to open-source software and the largest distributor of the GNU/Linux operating system. Kumaran received a bachelor of engineering degree in computer engineering from McGill University and is an active member of TiE Silicon Valley.