“Freemium is a hybrid generated by today’s business world.” — Giacomo Balli in Interview with FreemiumSFBay
Giacomo Balli is an iOS entrepreneur and freelance developer. He has lots of experiences about Freemium in the mobile app space. Originally from Florence, Italy he recently relocated to San Francisco, CA.
“The biggest benefit of Freemium is removing the sales funnel.” – Giacomo Balli
FreemiumSFBay: What does the term Freemium mean to you?
Giacomo: Many people invest a lot of time debating whether freemium is a business model, revenue model or marketing technique. I believe these marco areas are not applicable since they were coined at the time of “traditional” business. Freemium is a hybrid generated by today’s extremely advanced business world. It glues together the 3 macro areas in a completely new way: a revenue model on which you can build a business model which already implements marketing benefits.
FreemiumSFBay: What is the biggest benefit of Freemium?
Giacomo: The biggest benefit of freemium is definitely removing the sales funnel when attracting new users. There is no “harsh” decision to be made upfront which then gives you many opportunities to sell and upsell.
FreemiumSFBay: What is the biggest danger of Freemium?
Giacomo: The biggest danger is the fact that many people still associate cost and quality. The danger with freemium is that, depending on your product, you might want to keep that funnel in place not to waste resources. Freemium isn’t a silver bullet; you need to asses whether it makes sense when applied to your product, target and business structure.
FreemiumSFBay: What was your first experience with Freemium?
Giacomo: I make mobile apps, the industry where freemium was invented. I started using it when it first came out and was immediately amazed by the potential.
“You product needs to be “sliceable” into tiers.” – Giacomo Balli
FreemiumSFBay: When should a company offer Freemium?
Giacomo: Freemium should be adopted only when it fits well with product, target and business structure (or you are able/willing to change these). You product needs to be “sliceable” into tiers, target needs to be the mass and business needs to be able to scale and satisfy high volume.
FreemiumSFBay: If you have a free and a premium product, how “extreme” should the difference be?
Giacomo: Another great benefit of freemium is flexibility, hence the huge success in the SaaS business; there is no need to be extreme. If your product has a huge value, you can create intermediate tiers to accommodate all kinds of customers (think price elasticity).
FreemiumSFBay: What is the one issue you find most troubling with Freemium?
Giacomo: The one element that most often backfires is scalability of the infrastructure/service. When you implement freemium you open the doors to the mass: people who try the product just to try it. While these may generate sales, most will only “leech” resources. You need to be ready. Second is putting in place the best pricing model.
“Freemium is not the holy grail.” – Giacomo Balli
FreemiumSFBay: Users often expect free on the internet. How to do you change their mindset?
Users do expect free on the internet but they’re willing o pay if they see value applied to their life. Show value and they will pay (especially if there aren’t competitors).
FreemiumSFBay: How can you accurately measure success with Freemium?
Giacomo: Success is extremely vague and subjective. The main benchmark is obviously conversion and revenue. However, after the first implementation, companies usually start setting goals for the different aspects involved in the model (think advanced Google Analytics use).
FreemiumSFBay: To go Freemium or not to go Freemium–which way are you leaning?
Giacomo: Freemium is not the holy grail. There are big risks that hit very quickly due to the high volume. However, especially if you’re cautious with it an gradually implement it, most suitable companies will benefit from it.
Giacomo Balli @BigBalli is an iOS entrepreneur and freelance developer (iPhone and iPad). Originally from Florence, Italy he is currently based in San Francisco, CA. In 2010 he founded his business and has released over 50 personal projects in the AppStore in addition to all the apps commissioned by companies. Currently he focuses on developing his own concepts and helping early stage startups get on their feet with an app.
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