Most web services are free, at least for the "basic" features. One business model is to charge premium services like the professional network services such as LinkedIn and Xing. Many web services which offer functionality such as project management, groupware, CRM, and even niche specialists for mindmapping, calendar planning try to use this method. For most it will not work:
If the customer satisfaction can only be achieved with the commercial service package, the "free" part is nothing more than a teaser. There is no more virality, because only satisfied users invite their friends and collegues. And teaser services are the best way to lead your potential customers to your competitor. Once your future-ex revenue generator has seen the benefit of that service, he will search for alternatives and if they are cheaper, he'll stay there.
Hooking the customer because his friends or collegues are using that same service is barely tolerated. Especially early adopters don't like being hooked and they are the ones you need to start the web service business in most cases. Hooking your customer is anti-social and an aggressive defensive move. You don't care about customer satisfaction, you try to keep him by bullying him. Companies who fear loosing market share use often those tactics which just delay the inevitable. As a startup, that model is a nono.
And last but not least many of those premium services are artificially created. The difference of premium and free is purely arbitrary. Most customers will ask why? And when the competitor is offering something similar or better for free, your customers will be gone before you realised it. Such an artificial premium service cannot be a longer term solution.
So when are premium services useful and acceptal? A commercial service should be aimed at satisfying additional benefits for very few customers. Or benefits which may be perceived as luxury. Or services which link in to contractual and systematic needs of corporations. Or transactional costs which are part of normal business or personal practices and therefore acceptable.
If the customer satisfaction can only be achieved with the commercial service package, the "free" part is nothing more than a teaser. There is no more virality, because only satisfied users invite their friends and collegues. And teaser services are the best way to lead your potential customers to your competitor. Once your future-ex revenue generator has seen the benefit of that service, he will search for alternatives and if they are cheaper, he'll stay there.
Hooking the customer because his friends or collegues are using that same service is barely tolerated. Especially early adopters don't like being hooked and they are the ones you need to start the web service business in most cases. Hooking your customer is anti-social and an aggressive defensive move. You don't care about customer satisfaction, you try to keep him by bullying him. Companies who fear loosing market share use often those tactics which just delay the inevitable. As a startup, that model is a nono.
And last but not least many of those premium services are artificially created. The difference of premium and free is purely arbitrary. Most customers will ask why? And when the competitor is offering something similar or better for free, your customers will be gone before you realised it. Such an artificial premium service cannot be a longer term solution.
So when are premium services useful and acceptal? A commercial service should be aimed at satisfying additional benefits for very few customers. Or benefits which may be perceived as luxury. Or services which link in to contractual and systematic needs of corporations. Or transactional costs which are part of normal business or personal practices and therefore acceptable.
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