Get the most out of Freemium software for your business

September 19, 2012, 1:21 pm Lauren Hockenson Mashable Tech

Freemium is when company offers the basic functions of an app suite for free, and then charges more for premium features and bigger storage space

One of the most difficult things about starting a company is utilizing the right resources to optimize efficiency and promote growth. And it doesn’t help that the best tools for the job often come at a pretty hefty price. It’s easy to feel shortchanged, especially when the apps of your dreams feel like a mouse-click away.



But don’t despair. Over the last few years, startups benefited from the so-called “freemium” model — a company offers the basic functions of an app suite for free, and then charges more for premium features and bigger storage space. A classic example is newsletter platform MailChimp, which is free for a few subscribers, but as your userbase — and business — grows, so does the cost, increasing incrementally according to your number of subscribers. Taking advantage of freemium options can help you put together the enterprise arsenal of your dreams while also maintaining that shoestring budget.

However, it’s important to note that choosing freemium doesn’t automatically guarantee satisfaction. Here are some tips and tricks that will help you hedge your bets within the freemium system — and benefit like a high-rolling VIP.


Never Underestimate the Power of Google Apps

Some of your strongest business-running tools are probably the same ones you’ve been using forever. It can seem like a no-brainer and a bit small-time, but there are very few paid apps that can efficiently and accurately offer everything that Google Apps already gives you for free.

Looking for a free but confidential office chat system? Put Gchat “off the record” and have it. Need to have a real-time digital brainstorm about product strategy? Google Docs has built-in chat functions and real-time editing to get your thoughts to the right people. You can even use Hangouts on Google+ for important business meetings.

The proof is in the pudding — Google is free, easy to use, and can be tinkered to do a lot of heavy lifting that a startup needs. These apps also never go out of style, and can be integrated well into a company’s enterprise stage. Don’t brush off Google as small-time or for personal use only — these great features don’t always come at a fat price.


Don’t Overdo It

There are times when a freemium price structure is so discreet that going whole-hog and paying monthly for a service seems to make sense. It’s easy to be tempted by a low price tag, but often pricing systems are structured to entice buyers to go premium. Make sure you seriously analyze why a premium service is necessary before jumping the gun and overlooking the free option.

Social media publishing service Google Analytics and an enhanced analytics report. It sounds like a great investment for a fledgling company, but think about how your company plans on using social media. Does your startup live and die by Facebook and Twitter? Do you have an alternate option for tracking analytics? The basic and free HootSuite tools may suit you just fine.

In short: Don’t be enticed by a service’s premium option just because it’s within budget. Save it for something that really matters.


Mind the Fine Print

Believe it or not, there are some apps that offer extra deals beyond free — it just takes a little digging to find it. Read through everything your plan offers, and you may find an extra benefit hiding, if you work for it.



For instance, PayPal’s free merchant account is an indispensable asset to product-focused startups looking for a cheap way to do transactions. But there’s more to it — a closer look at the fine print of PayPal’s transactions and payments reveal that some companies can benefit from a discount on all merchant fees. In fact, companies are allowed to apply for a special discount to transaction fees if transactions exceed US$3,000 monthly, if transactions typically average less than US$10 or if they are a registered non-profit. That could mean big savings for a bootstrapping business, and it could put more dough in the company account, not less.

In reading the fine print, you may find savings that can make a big difference.


Referrals Are Key

In other words: Your friends can be your biggest helpers. Many freemium services offer extra features in exchange for social referrals. If you’re in need of more firepower for a favorite tool, then your best bet could be to bring out the megaphone and start broadcasting.

Consider Dropbox, the much-raved about cloud service that offers a nice 2GB of free space for everyone. But, the more enterprising (and friend-rich) can gain a 500MB increase in storage for a successful referral to Dropbox, all the way up to a sizable 18GB. If you’re the enterprising sort with enough pluck to refer your contacts to the service, you could have plenty of cloud to build your business on.



This tactic is a gamble and not a clear shot for everyone. But, if you’re an evangeliser and a real stickler for staying free, then referring friends to a service can give you an extra boost with no monetary cost involved.


Not All Free Plans Are Created Equal

Because freemium is such a popular structure, it seems like every service under the sun is offering a use of their product, gratis. However, “free” is not always equal — even companies that offer similar services have differences in opinion about what should be offered without charge and where pro bono is capped. Don’t forget to shop around: Just because it’s free, doesn’t mean it’s the service you want.

Even if you’re looking for something as simple as a service to build forms, there are plenty of options to consider. Some free plans, such as the one offered by Wufoo, put a cap on both the number of forms and the number of results — not helpful for a company looking for heavy feedback. Other websites, such as FormAssembly, offer unlimited forms but keep a barrier on results. Still others have different plans, and having a free service doesn’t do much when you have to start shelling out cash to get what you really need.

Before you start app shopping, focus on what your goals are for the particular service you’re considering, then find the free plan to fit your needs. Otherwise, you may find yourself crippled by the freemium ceiling but already invested in a service.


Know When to Upgrade

This is arguably the most important tip regarding the freemium system: Know when to bump up a free service to the paid premium tier. It’s important to know your limits and the resources you need to grow your business, and ignoring or downplaying the necessity of a service for the sake of your budget can be a disastrous maneuver.

Conversely, you should know when it’s time to look for a free service to replace a stodgy paid software. Prioritize the tools you have at your disposal, and make sure you devote your budget to the biggest players in your digital system.

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