Developers today are looking seriously at the advantages to be had from free entry-level versions of commercial software—so-called “freemium” software. Developers often see freemiums as great test beds for potential commercial products. This is a trend that looks to be taking hold in the enterprise and developer communities.
Freemium, a mix of “free” and “premium” has started to pop up regularly as part of the menu you can choose from when it comes to getting your hands on software—from open-source software, to software you can buy on perpetual licenses and install on-premises, and every combination in between.
Users like the bottom-up freemium model, where they can use the software first and pay when it delivers value. Software companies get sales and renewals if products perform. So everyone’s interests are aligned. Little surprise we’ve seen the list grow with the likes of Dropbox, LinkedIn, Yammer, Skype and more recently BIRT iHub F-Type, with both free and paid-subscription functions available.
Some companies use a variant of freemium where they offer a free lightweight version and then upsell the product to more sophisticated enterprise users. Box is a great example of how this model has successfully driven sales.
The idea behind freemium is not new; it is a revamped concept of shareware from the 1980s and 1990s. A freemium pricing strategy basically puts a product’s or service’s capabilities on a sliding scale: at the bottom end of features and capacity it is offered for free; at the premium end it is upscaled to paying customers.
Freemium has mushroomed in the consumer IT arena, but it has started to creep into the enterprise software market, enabling companies to build large user bases and upsell into them for customers looking for a premium product or service. This so-called consumerization of enterprise software should not come as any surprise. It is basically a perpetual motion sales tool on which to sell your product.
Cloud and Software-as-a-Service are two of the big arrivals to the “new” IT procurement and consumption model, with new, disruptive but also traditional enterprise ISVs climbing aboard. At the same time, enterprise software is becoming more agile in order to meet customer demands. Any route that allows developers to obtain results quickly is deeply attractive.
Social media has also helped to drive the freemium bandwagon. Social networks and platforms have become a great way to build communities of users who can comment in seconds from around the globe. This makes it fast and simple for developers to try the freemium products their peers are chatting about.