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Freemium Conversion Survey

Posted by Michael Bloch in ecommerce (Saturday May 19, 2012 )

A recent survey found a freemium approach to sales works incredibly well – as a general concept anyway.

Freemium is whereby a product or service is provided free of charge, but for additional features a fee is charged. Fremium differs from “demo” in that the product or service is functional to some degree.

A recent survey from iYogi Insights, the Consumer Adoption of Freemium Goods, found 42% of respondents had paid for Freemium products/services after experiencing them.

Conversion rates differed greatly between various sectors:

Movies/Video – up to 65%
Cloud based services – 41%
Productivity tools – 34%
Security – 37%
Music – 30%
VOiP – 41%
Pioneering – 44%
Backup services – 46%
Games – 26%
Image and video sharing – 24%

Before you go rushing out to start a premium movie/video site; bear in mind the percentages reflect the number who have purchased from that category. With thousands of players in each sector mentioned above, those conversion figures are not going to translate to per service. Your own mileage will definitely vary under the freemium model.

For example, I bought some software recently after trialing at least ten different freemium packages.

However, as iYogi puts it – “The way to get a million people to pay is to get a billion people to begin using your product” and “No one can speak so eloquently for the product or service as the product or service itself.”

First-time users delivered a higher degree of conversion in almost all the categories covered under iYogi’s survey.

If you’re a software provider, freemium is critical these days I believe. I won’t buy software without either having tried a freemium version first or in the absence of that, an iron-clad, no-questions-asked, 100% money back guarantee. The former can override the need for the latter.

Freemium provides an excellent acid test for goods and services – iYogi points out: “If it can’t ‘sell’ for free, can it ever sell at all?”

You can read the full Consumer Adoption of Freemium Goods here (PDF)


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