Effective Marketing For Startup Companies

Freemium, the business model championed by venture capitalist Fred Wilson, is now slowly taking its place in business. As of this writing, more and more companies offering freemium products and services are slowly rising to the top of their class, all visibly viable, healthy and making money.

Among the most notable to date are Evernote, Remember The Milk and Dropbox. The list also includes Freshbooks, Jott.com, Box.net and good old Flickr.com. The new startup Xobni joined in, using the ad-supported model.

What makes these companies tick? How were they able to convert such a “free” model into something that pays up? Let us have a peek into some of them.

Evernote

In concrete dollars and cents, Evernote is not making enough to turn in a profit. However, it has a winning clause in its agreement with its users.

While only 0.5% of its customer convert to paying the company $5/month within 30 days upon signing up for the free services, this figure rises to about 4% if the customer had used the free version for almost a year.

The catch, actually, is in the application itself. Working as a drawer of sorts, Evernote users will have to get a bigger one after a time. This time, the user will have to buy one. Given the ease of use and the harmony of its application with one another, Evernote users will definitely switch to a paid model after a time.

Remember The Milk

For such a simple application as a to-do list, Remember The Milk has a winning formula for a freemium application. The first come-on is the ease of use in adding or deleting tasks that had been completed.

The most important part of the application is adding the most important part of a simple to-do list: reminders. Remember The Milk sends out these reminders in devices most convenient for you: via SMS on your mobile phones, IM or email. (It even supplies the message with a map to make things easier.)

Remember The Milk charges in its pro version support for mobile phones like iPhone, Blackberry and the Windows Mobile devices. With the service, you need not be in your computer doing your to-do list.

Dropbox

Dropbox skips on one common freebie, the most basic of all the rules in freemium – no downloads of applications. However, Dropbox evens it up with having the easiest to install and even easier to sign up for freemium application.

Dropbox’ line of business is online storage-synching service. Users start out with 2 GB of storage space for free, which you can use up quite fast these days. Once it happens, you have two choices: switch to others, or buy yourself a premium package. At first glance, though, you may balk at paying $120 a year to upgrade to a 50GB package. Often, you would end up paying $9.99 a month subscription because it looks affordable.

As you might have noticed, most premium versions of freemium applications are actually subscription services and not outright purchases or one-time buys. For the company, this is a never-ending purchase agreement.

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