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Transcript: Season 2, Episode 13

Welcome back to that talking thing. I'm Kim I'm Jason. This is episode 13, season two, and we have some business topics later on in the episode, we're going to be talking about AB testing, if that's your jam. But first up, we're going to talk about freemium business models. And if should every membership site have a freemium model?

Yeah. What is a freemium model? Jason? Okay. Ah, freemium is when you have a paid product, but you give away. Something for free first. It could be as simple as a free trial. I seen people talking about free trials as being freemium, but more often there's a free version of something that is limited in some way.

Um, but you kind of capture people and then they have to upgrade. There's all kinds of like MailChimp has a free plan, but when you use it a lot, then you have to upgrade. Um, specifically, specifically, it was kind of a shower thought for me that, you know, our membership product is freemium and. I also had this thought that like, it was as simple as like we should write a blog post or have a video about the freemium business model and how it applies to membership sites.

And I started thinking, I was like, should every single membership site have a freemium version? And sometimes it's obvious like, yes, like a podcast, there's a free podcast and a premium podcast. And that's your. Membership. Uh, but sometimes it's a little more settled. Like it, your blog posts are free, but the stuff you actually pay for is your premium.

Like, so even if you don't have like a free product, almost every business is putting like free content out into the world. So I was trying to wrap my head around this and figure out how we could explain it to our customers. Patrick shared a tweet recently from Nathan Berry founder of convert kit. It was, you know, an audience is like a business hack.

Like one of the best things to have in your pocket when you're starting a new business, like just a runway to being more successful because you've created an audience and that's what people use freemium for a way to create an audience that's willing just enough to give you some personal information, willing to commit just enough to liking your stuff for some small downloadable PDF, for some access to something.

And you can later market that. So kind of the goal for us, we do open-source everything, but for freemium on our site, you need to create an account to access documentation. Yeah. That's really the only thing free people get as documentation, or you can get the plugin for free. We serve a version of the plugin for start download the generic membership site.

Writing this blog post, is it like the title could be like, you have to have a free, what did we, we had like stats on this. How many of our members had freedom when Patrick did the research? It was an overwhelming majority. Had a free membership level and were priced at a monthly payment under $30. Yeah, it was the most.

So maybe this is not news to folks like, Hey, you have to, but, oh, but, oh, the other motivation for this, remember when we're in person at booths at conferences, there's this order of conversation where they say, what do you do? It's a membership plugin for WordPress. And what does, what does that mean? Like you can charge for access to content.

And then as a. What does it cost, but it's free. And like, how do you make money? Or they say like, can you use it even if you're not charging for access? Yes. I remember some plugins got paid memberships pro, so it's kind of, we have to say, Hey, it's okay if it's free, you know, figure out like a nice way to include that message.

I think some of the app updates we're doing in the workflow is like, is this a free level? But I thought like, we should just recommend if they don't have a free level, like, Hey, you don't have free level that great one. But I think people don't realize that they could use a membership site with a free level only as a lead gen for other services, for other products, for workshops delivered in person or virtually for events coordinated, uh, for coaching, for things that, you know, they might see the membership site and say like, oh, that's like a paid thing.

People I don't want to get paid that way. My product has to be direct sold. My product has to be. Price configured based on, you know, the audience I'm serving with my coaching skills, but what could you segment off as a freemium version to get people interested and get them like a minor version experience version of your product.

As we were brainstorming videos on this morning, me and Mandy, and I said, how cool would it be if we collected a bunch of people's. Videos saying like, what's your hobby and we'll design a membership for it. We'll design. We could design a freemium membership. We could design a multi-level membership product so we could get videos of people saying, you know, I make handmade wood crafts for my family.

Every Christmas I make a new ornament for the tree, and then we could brainstorm three business models they could make. That's fine. Yeah.

I wonder, I was thinking like this really like Mr. B style, give someone a business instead of like, give him a car, give him a business. That's a little scary though. Cause we used to do that for people who sought us out and paid us and they still were like, wouldn't do anything. And you're like, you wanted a business and you're like, yeah, but I have to work.

Um, that's interesting. Do you think freemium works best when you start with. From the get-go like we, I think people over architect, their membership site design too much design for some end price level. They want some end like access level they want. And you think freemium makes the most sense at the like getting started stage or how do you tack on freedom?

Yeah, because it's like, just get something out there and get email addresses, which is, I think Nathan Barry's point too is, oh, I'm writing a book. It's going to take a year. And you're like, well, in the meantime, right, like the first chapter and put it out there and get an email address, an exchange or something like.

I didn't read that specific tweet, but I'm imagining it was, that was all, it was, it was just, it's like a business hack. You have an audience already. Sure. Yeah. So finding ways to build audience and there's like a social media version of it getting follows, but email is still just king. Um, Hmm. So I'm just like take it, but some people it's interesting.

Some people maybe they're turned off by freemium, but if you explain it, Hey, like it's not what you think it is. It's not. Given away something for free. It's like giving them content, giving them, you know, service, having hourly, you know, um, streams and videos where they can reach you. But if you want more, so you could really add free level to an existing monetized membership.

It wouldn't deplete the value of your monetized membership. Hopefully your members, you could hide it from them. You would present it in a way that it's, you know, the light version or just the steps, get your foot in the door, kind of thing. Yeah. And it's like trying to cast a wider net to find people. I don't know.

Maybe we've got to keep saying, we know for our own product, people who sign up for free versus people who sign up at the paid level automatically, this is a segue people sign up for free versus sign up for pay. They automatically what, well then who enters at the free level and the paid level. So, uh, if you have a freemium level, Mistake.

The fact that you'll lose out on paid sales, that some number of people are only willing to start at free. And some, even when we present a free level on our own product site, some number of people, I think it's 55% of people last week assessed many years ago was, would start right at a paid level. So they skip over free.

People will skip over that stat. So of all paid signups, half of them didn't have a free level first. Um, and something like 4% of free users will upgrade within three months and maybe up to 10, like over the course of some people will stay for free forever. Yeah. Which is because we don't want that. Okay.

Yeah. I think most membership sites, the free version would be more limited. The access would be more limited. If you were a course site, you couldn't find the course any other way than being a paid member of it, but there's a free version of the course. That's the first X lessons, the excerpts, you know, the first five minutes of the videos for page one of the workbook.

Yeah. That would be the challenge is to reverse it as like what business model would like having a free version hurt. Cause it almost seems like you're only going to get people's attention and potentially get customers. Like it seems like there's limited downside. You probably just have to think of. I know it's like dating sites.

Do like women are free. Men are paid kinds of things. Technically freemium, is it? Oh, I don't know. Yeah. That's um, what like pricing based on the audience demand pricing. Yeah, we met, we actually, we started a segue, but we missed it. Our next topic was about AB testing. So this free verse pay comes up in our AB testing we're doing, or, um, but, uh, I feel like we talked about this on podcasts before.

I'm bringing it up again, I'm having deja VU, but that is also an AB test. As you, for example, have a headline, let's try a different h