Industry
Study: 'Freemiums' Lead to Purchases
By Alex Palmer
May 17, 2012
A new study by tech support research company iYogi Insights finds that consumers who use something for free are often willing to pay for it in the future. The survey of more than 2,000 iYogi customers found that 42 percent were willing to pay for new products or subscribe to services after initially using them at no charge.
The report put particular focus on iYogi’s specialty of technology services. Among the particular findings were that movie and video consumption enjoyed free of charge led to individuals converting to paid subscriptions in 65 percent of cases. The same was true of 41 percent of users of cloud-based services who were initially offered complimentary access to the service.
Computer security service users converted to paid subscriptions in 37 percent of cases. Slightly lower rates did the same for productivity tools and music services.
“The perceived value of ‘free’ was negative five or six years ago,” says Vishal Dhar, co-founder and president of marketing for iYogi. “But with the Internet and different types of services that are available and people finding use in those services, ‘free’ is not necessarily a negative way to market your product.”
To the contrary, Dhar adds, offering something for free appears to communicates confidence in the product and the value consumers would see in it after using it for a trial period.
Conversion rates after receiving a “Freemium” were especially high for first-time users. A full 68 percent of first-time users subscribed to movie and video streaming services after a trial period, while 54 percent said the same of productivity tools, and 51 percent of cloud services.
“It’s a powerful incentive but it’s also changing the way people look at marketing their product,” says Dhar. “You want to be able to experience that service or product and feel that sense of confidence before you say ‘okay, let me spend the $169 I have to pay for an annual subscription.’”
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