indie_preneur

Has 'fremiuim' business ruined us youngins?

3.8.2010

By indie_preneur

For me it started with Hotmail. I got a free email account in the mid-90s and started down the web road. Sure, I could have upgraded to a paid account for more storage space, but I was a young teen and didn’t really need anything more. A few years later, Google dropped on the world, and we’ve never been the same.

Shortly afterwards, Gmail came out and if you got an invitation, it was free and awesome. Hotmail and others that wanted to charge for storage had to drop that business model or lose out to Gmail. In the end, it didn’t really matter, as Gmail quickly became the most popular webmail (tho a good amount of people do still have AOL(remember them?), Yahoo!, and Hotmail accounts), and we all became accustomed to free webmail service.

We’ve also grew to expect free everywhere in our lives. The ‘Fremium’ business model can be found in almost every facet of life for us nowadays. Free samples, free downloads, free webinars, free service, etc. For people a bit older than me (28) upwards to the baby boomers still working, this is most likely something that is nice and new, but definitely not how business generally runs. However, for my generation and younger, we (sort of) expect that a business will have a fremium model of sorts.

How has this affected our perceptions of business?

Say for example, you enter the design world, you are somewhat expected to offer free comps before moving forward with a project. I say this because without some work to show, you will struggle to get a job. And without doing some things for free, you cannot get experience to show for a job, it’s quite a vicious circle. As someone who is constantly trying to build my portfolio and skills, I have embraced this (for now at least, if all I did was freelancing, I might have a different opinion though). Whenever I meet with a potential client, I am aware that I’m going to have to do something (usually a mock-up) for free to get the business. Until I have a more robust portfolio that speaks for itself (or until the economy really turns around and people don’t expect the world for $100), I don’t believe I can charge for initial comps, unless of course the client offers this.

In addition to how I sell myself, I use a bunch of online apps to help me with things I cannot, or do not have the time to do myself. I use mint for budgeting, dropbox for online storage, feedly for my daily newspaper, skype to stay in contact with family around the world, WordPress for my CMS, toggl for time tracking, last.fm*–all of which have (or only offer) fremium models that are quite sufficient for my needs. I can’t imagine paying for any of these, although if they required this, I’m sure I’d decide to keep a few. My parents often refer to talking to their accountant or their whomever, something that I’ve never decided to do. Older generations grew up knowing to get something good, you would have to pay for it. The younger generations have been used to getting something good for free, or at least getting the tools to do it ourselves for free.

Does this mean to charge for something, we have to deliver something exceptional?

I don’t mean to suggest that creating a product that is just good enough is how the world used to run, but it seems more and more evident each day that this was more pervasive than not. My Dad used to tell me it wasn’t how great the product you sold was, but rather how well you could sell it; the auto industry is a great example of this. Before the internet gave every Tom, Dick and Harry a voice, no one could really hear all the little guys complaining about poor products.

I feel the fremium model make us (or a business) HAVE to deliver a great product. Without it, you are going to have a hard time selling the fremium model, and an almost impossible time trying to sell the paid model. So although I think it’s spoiled us a bit in terms of what we expect, it has also pushed up to make a much better product because the magnifying glass we are under now is much larger and more intense.

Also, the fremium model has given way to the open source model which A) makes things available without charge, and B) promotes sharing ideas, challenging ideas, and pushing the limits of what is possible.

* We’ve also become the On-Demand generation. I love my DVR and last.fm–no commercials to annoy me. I honestly can’t remember what it was like to watch a 30 minute show, with 21 minutes of programming and 9 minutes of commercials. The Super Bowl seems to be the only time I watch commercials. Although Gen Xers did live thru the print ad / tivo-less era, it’s less likely that Gen Yers have known anything but On-Demand living. Although this has been written, the coming of the iPad (and other tablets) might change this up a bit, but it seems unlikely for our generations as we probably won’t view / read the old media (that died in print) on the iPad.

Tags: business, fremium

This entry was posted on Monday, March 8th, 2010 at 10:22 am and is filed under marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.