We've built a 'Cargo freemium' application to format and convert videos. We give away daily free quotas and charge for additional quotas (if the user can't wait for the next day or has a lot of videos).
We're still on trial and error mode on what to give away for 'free' and price points.
At the start most users didn't even use 1/2 their free quota s. Which is both good and bad. Good in that most 'free' users weren't putting a strain on the servers, but it's also bad because if they were leaving half-empty (quota on the table), there was little incentive to pay up. The other variable in the process is that if the 'free' quota is too low, nobody is able to 'test' their videos for free (so it's a balancing act to get average video size too to fit in the free quota)
User acquisition and marketing has been the most problematic for us. Our conversion for paying customers is still in the 1/50 range! If you consider average adword clicks in-around the .30-.50 cent range, that's about 15-25 dollars to get a paying customer on average. Operating at this level the margins are razor thin to say the least (We've tried to cut down on the marketing costs, but bidding anything lower than that and you get little to no traffic)
Could always try that they are able to use it completely free with a small watermark for your site in the corner. Free advertising for you and you get some value from your free users.
I've had similar experiences with AdWords. It's very tough to get a decent ROI. Plus, toying with it is a real time sink, and if you want to do it scientifically, then that's even more time and effort you have to invest.
We're still on trial and error mode on what to give away for 'free' and price points.
At the start most users didn't even use 1/2 their free quota s. Which is both good and bad. Good in that most 'free' users weren't putting a strain on the servers, but it's also bad because if they were leaving half-empty (quota on the table), there was little incentive to pay up. The other variable in the process is that if the 'free' quota is too low, nobody is able to 'test' their videos for free (so it's a balancing act to get average video size too to fit in the free quota)
User acquisition and marketing has been the most problematic for us. Our conversion for paying customers is still in the 1/50 range! If you consider average adword clicks in-around the .30-.50 cent range, that's about 15-25 dollars to get a paying customer on average. Operating at this level the margins are razor thin to say the least (We've tried to cut down on the marketing costs, but bidding anything lower than that and you get little to no traffic)