Ep. 049: Changing Business Models
With all the hype around Picmonkey suddenly charging for all accounts, rather than offering a free version with an option to upgrade, we decided to talk about changing business models and whether or not it's a good thing.
Picmonkey went from a free-with-option-to-upgrade business model to a free-to-try business model recently and a lot of people are in an uproar. But is it all bad? We don't think so. Here's why:
- Picmonkey experimented with this model before putting it into place permanently. They discovered they had a higher retention rate when charging after a free trial, rather than hoping free-forever users would eventually pay to upgrade.
- Businesses need to make money in order to stay in business. In order to continue adding great features, they need to charge for the service. (And it's still a very minimal fee.)
When it comes to determining what you charge for and what you give for free, remember what Erin says: "You can give away the entire farm, but people still need the farmer." People still need you to guide them.
Here's the important thing: business models change because they meet the needs of the people. Businesses can provide a better experience for their audience, with translates to higher retention rates. Higher retention rates allow businesses to charge less, which is beneficial to the paying customers.
By the way, here's the crazy terms & conditions incident I mentioned. Would you clean toilets for free wifi?