Software and information are both great markets. It doesn’t matter if it’s online software (Saas) or offline books/tapes/ebooks - Freemium/Premium is the way to go.

What better way is there to sell something than to let people try it out for free?

For instance, Freshbooks is by far my favorite online invoicing application. We use it for Axiium and Tech Solution because you can pay right through Paypal and there are recurring invoices. But how did they hook me? By letting me try it out for free - up to three clients and one employee.

Well, anyone who is running a decently successful business has more than three clients! So once you get in, see the functionality, and decide you want to use it more - you just upgrade your account!

Below, we are going to see some of the benefits of Freemium services. And I highly encourage you to look at them more closely. If there is something you can do in your business or with your marketing efforts to mimic this - you’re golden.

5 Advantages of Freemium/Premium Advertising Models

1. Collecting Information - Information is worth more than any other business investment in today’s world. If you have a list of 3,000 dedicated, loyal customers the value of you business is exponentially increased. You can market to these people, send product launch information, or get feedback on your newest service. These people will stick with your through thick and thin.

So why not find more of these people?

One of the easiest ways to do it is offer a free service or a trial run. In order to sign up, they give you their email address. They know they are going to need a password to get it. It doesn’t matter if they pay you now or later - the point is you have their contact details. And as long as you offer a reputable service - you will have no problem getting them to open your email marketing letters.

2. It Costs Nothing - When talking about software and information products - giving free trial runs costs next to nothing. It’s one more table in a database and a bit of hosting space. But that’s about it.

Software as a service applications lend themselves nicely to this method of marketing, which we discussed above. But what about other things? Ebooks, DVD’s, training courses, magazine subscriptions… Why not give them 7 days free? Or a month’s worth of magazine issues? Or a free course on CD (aka The computer guy on the commercials)… You just need a good purchase agreement and a great marketing message, “We’re so sure you will love our free product that we know you’ll come back…”

Get’s ‘em every time.

3. Beta Testing - When you give a free run to a new client, you can ask them to send feedback about your product. This, in essence, is a great way to ‘beta test’ your offering. What better way to gauge the response of your target market than to ask them yourself what they think.

These people are usually the early adopters. They are the ones who try out new things and then tell their friends how much they liked them or how bad they sucked. So if you work with these people, you are going to be heroes in their eyes, and you will have a loyal group ready and willing to pay for the premium version.

4. Increase Referrals - In the online world, referral marketing is one of the many keys to business success. And when somebody is trying to sell your product for you (so they can take their cut), they have a much better time doing it when the service is try-before-you-buy.

It’s easy to get someone to sign up for something free, and when you have referral marketers doing the job for you it’s a piece of cake. Offer a decent incentive, create lots of banner for them to choose from, and give them a referral link. All they do is write an article or post an ad and they make money. Make it as easy for them as possible. After all - this is a bloggers paradise. Increase your viral appeal by catering to bloggers.

5. More Client Satisfaction - One of the worst things that can possibly happen is to disappoint someone. This goes double if that person paid you for a service that they thought they were getting but didn’t receive. If you go with a freemium model - they know exactly what is in store.

Additionally, they know you’ll honor their requests for more features or if they have problems. If they want to see some sort of increased functionality or are having a problem with the interface they didn’t lose anything. And if you team goes in and helps the person - you will have a loyal customer for a very long time.

Building the Freemium Model

Granted, some products and services lend themselves to this way of thinking more than others. As we talked, software and information feels right at home here. But big screen tv’s and pc’s aren’t quite as freemium friendly. There are always applications though. Who would have thought free trials of magazines could be so successful?

I am sure most of you have bought something that was given away as a trial or marketed through a freemium track. What made you buy? Was it a good decision?

[img Lori Spindler]