Free and premium and everything in between

I read this great post on dividing free and paid features in “Freemium” models from Chris Dixon (who’s quickly becoming my entrepreneur’s blog answer to Fred’s VC blog).

Chris’s final thought really got me thinking though:

A final thought: when in doubt, err on the side of putting more features on the paid side of the divide. It’s easy to add features to the free side; however, removing features from the free side is a recipe for trouble.

I’ve written in the past about free features and paid for content and I don’t think anyone’s really nailed both sides to this yet (the sides being the consumer/user and the business sustainability). But Chris’s post really got me thinking. If you’re debating between free and not free, I say make it free and think of something else that could be revenue generating.

To use Chris’s examples, storage, you know people are not going to pay for online storage so give them such a ridiculous amount of storage that you know they’ll pay for it. Om has a great post on freemium with an example of exactly how this works for dropbox. You give people a ridiculous amount for free (up to 2GB) and then charge for anything more, this makes the switching costs so high that you know people would pay for the additional storage rather then trying to find a way of switching. Genius.

Give people real value for free, give them significantly more value at a cost and make the transition from free to premium easy that’s my line and it seems like the really successful freemium model users (Flickr, Dropbox, 37Signals) employ a similar philosophy.