Growth August 10, 2020

Tip: Increase your revenue with a "paid freemium" business model

Growth Bites @growthbites

There's a way to reap the benefits of a freemium model without giving the product away for free. Offer your core product at a low one-time price to get customers, then upsell them on a subscription to a more lucrative supplementary product or service.

Joey Xoto grew Viddyoze ($3,000,000/mo) using a "paid freemium" business model. He charges a flat fee for a full license of his video animation software, but then upsells customers to a recurring plan for unlimited video templates. People seem to find paying just $67 for a full software license enticing, so this approach gets users in the door (much like a standard freemium model). And once they see the value, a significant portion (20-25%) actually ends up converting to the subscription. But Joey doesn't leave it up to chance. The subscription gets pitched to new users during their very first onboarding video.

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  1. 2

    Interesting approach, never really thought of that approach. Any other examples you know of?

    1. 2

      I use the same approach on https://learnwatercolors.net/, you can sign up for free and access the platform with a selected content then if you want to access all of it you can upgrade to a monthly membership. Now the reality is that most of our members are free members... I guess also every niche/website/product is different :).

    2. 1

      I've seen a few physical products (some wearables, for example) that attempt to upsell customers to a subscription after they've paid for the core product. But no, I don't know of any other online products doing this.

      Interesting model, though 🤓 Would love to hear of other experiences with it.

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