Startups have had success in the past with the freemium business model, but is it time to retire it?
Rags Srinivasan sees growing discontent with freemium and a “return to the roots of marketing” that starts with customer needs and gets “your fair share of the value created.” In this guest post for Gigaom he points to inherent problems with the freemium approach, saying that it wrongly leads “startup founders to focus on the product rather than customer needs.”
As an alternative, Srinivasan presents a model that targets specific customers rather than trying to grab all customers at once and hoping some will choose to pay for the enhanced version. Hope, on its own, is no way to run a business. “Shooting an unlimited number of free bullets and hoping some will hit the target is a shotgun approach to monetization,” Srinivasan writes. And as one CEO told him, “It is time to retire the shotgun.”