Exactly. They write, "Customers with less than 1GB but paying our full subscription fee were our most profitable customers."
Shouldn't they have known how many paying customers were below the 1GB threshold and been able to anticipate all that lost revenue? It seems like it should have been obvious from the start that the 1GB free was too high for them. Why not 250mb or 100mb or 50mb or whatever was below where all those high profit paying customers were sitting?
Freemium, as I understand it, is about providing a useful free service but with constraints that are hit by serious users fairly quickly. Useful enough that the product is usable and will entice a user to want to pay to keep using it, but with constraints enough that it won't be useful forever if they keep using it (i.e., they'll hit the limits and have to pay). Seems like for Phanfare, 1GB was way too much space -- users were finding the service useful, but never hitting up against that constraint.
Shouldn't they have known how many paying customers were below the 1GB threshold and been able to anticipate all that lost revenue? It seems like it should have been obvious from the start that the 1GB free was too high for them. Why not 250mb or 100mb or 50mb or whatever was below where all those high profit paying customers were sitting?
Freemium, as I understand it, is about providing a useful free service but with constraints that are hit by serious users fairly quickly. Useful enough that the product is usable and will entice a user to want to pay to keep using it, but with constraints enough that it won't be useful forever if they keep using it (i.e., they'll hit the limits and have to pay). Seems like for Phanfare, 1GB was way too much space -- users were finding the service useful, but never hitting up against that constraint.