How much money can you make with the freemium model ?
Well, it all depends, typically on those two key values, conversion and retention.
Let’s take a very conservative example to give you an idea of what you can achieve with relative ease. If you’ve got 100,000 uniques per day in your ‘free’ bin and you convert at a lousy 0.01% that’s only 10 sales every day. Sounds bad right ? Keep reading: With an average retention of 90 days and a product price of $39.95 per month that translates in to:
$438,000 / year.
How did I get to that figure? Well, the 10 sales each represent 120 $ over the lifetime of the account. If the 10 sales is a longer term average then you can basically take it as read that over the course of a year you will continue to sell to 10 new subscribers every day, so every day represents $1200 in turnover, which works out to a shade under 450K annually.
At a slightly better conversion rate or retention the numbers go up considerably, retention is the hardest one to measure (because the feedback loop is very long) but you if you can stretch those 90 days by just one more month you’re suddenly making an extra 150K profit every year.
Increase your conversion rate to something a bit higher and the numbers shoot in to the millions of dollars per year. So yes, it works, there really is money to be made here if you play your cards right and you are willing to spend the time. This is not a scheme to get rich overnight but if you stick to it over the longer term it will work well for you. <!– 112 –>