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Latest issue of SaaS University Journal
Softletter's SaaS University comes to new locations in 2012More information here
April, Vol 4, No 2
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COMING IN APRIL, THE2012 SOFTLETTER SAASREPORT
The latest edition of theindustry's most comprehensivedrill down into Software as aService from the provider's viewwill be released this April.Purchase the 2011 edition andreceive a free upgrade to the2012 edition (and save $200 sincethe price of the 2012 edition risesto $799 when it's released). Newanalyses include discounting,freemium programs, trial access,and much more.
More information on theSoftletter SaaS Report Here
Innovative CIOs and Leading-Edge Companies to Speakat Cloud Analytics Summit on April 25
Executives from Google, Deloitte, Splunk, Zynga and Others to Discuss Business Intelligence (BI), Big Data and Data Integration Strategies for Success in the Cloud - Register Now for Complimentary Passes
SoftLetter
is pleased to be supporting the
Cloud AnalyticsSummit
which will provide an executive forum for corporatedecision-makers to learn about the latest Cloud-based businessintelligence (BI) and analytics solutions and strategies that canhelp them harness their 'Big Data' sources and integrate theirsystems and applications into a more productive enterprise-wideresource to achieve their corporate objectives.The
Cloud Analytics Summit
will take place on Wednesday, April 25, at the
Computer History Museum
in Mountain View,CA, and will be hosted by Jeff Kaplan, the Managing Director of
THINKstrategies
and founder of the
Cloud ComputingShowplace
. The following corporate executives are among the first to agreeto speak at the
Cloud Analytics Summit
:Jane Griffin, Americas Leader of Deloitte Consulting LLP's Analytics PracticeJu-kay Kwek, Product Manager of Google's Big DataInitiativeKen Rudin, VP Analytics & Platform Technologies, ZyngaDoug Harr, CIO, Splunk David Roth, CEO/Co-Founder, AppFirstLonnie Wills, CEO/Co-Founder, CloudTriggerJoseph Szmadzinski, CEO, IT Management ResourcesChor-Ching Fan, Senior Director of Analytics ProductManagement, LogiXMLRussell Hertzberg, VP SaaS and ISV Solutions, SoftServeChuck DeVita, Founder, Growth Process Group
SaaS UniversitySaaS University OverviewSaaS University, Austin, TX,Feb. 28-29Why Attend a SoftletterSaaS University ConferenceWho Should Attend SaaSUniversitySponsorship and ExhibitOpportunitiesPast VenuesSubscribe to SaaS U JournalSaaS University JournalSaaS Crossword Puzzles
Subscribe to Back Issues
Don't see back issues of
SaaS UJournal
?
Please subscribe to theSoftletter
site to obtain access to back issues. Subscribing to the Softletter siteis free!Recent back issues include:
What SaaS Providers CanLearn from Telecom BillingSelected Key Excerpts fromSoftletter's 2011 SaaSSurvey, Part II of IISelected Key Excerpts fromSoftletter's 2011 SaaSSurvey, Part I of II
Collecting VAT on SaaS: WhatRules Apply?Selected Key Highlights from theSoftletter SaaS Pricing, Billing,and Discounting Survey, Part IIof IISelected Key Highlights from theSoftletter SaaS Pricing, Billing,and Discounting Survey, Part Iof IIMulti-Tenancy and the Ghost of Objects PastOctober, 2010, GovernmentContracts and the Cloud: TheData Security ChallengesSept., 2010, The Most and LeastEffective Indirect Marketing LeadGeneration Programs forSoftware as a Service CompaniesSummer 2010, Why DoCustomers Buy SaaS? Based onSoftletter Research.June, 2010, CUSTOMIZATION
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Qualified CIOs and other executive decision-makers from mid-size and large-scale enterprises may take advantage of a limited number of complimentary passes to the Summit.
Register now
to see if you qualify for this limited offer.Other friends of SoftLetter can save 10% on the current Early Bird registration rates when they register for this event at
http://www.amiando.com/cas.html
by using special discount code
SU12
.
The
Cloud Analytics Summit
is a part of the
2012 CloudInnovators Summit
executive forum series aimed at helpingcorporate decision-makers better understand how they canleverage the latest Cloud innovations to satisfy their businessrequirements and achieve their business objectives.Contact
Marc Sternberg
if you'd like more information aboutsponsorship opportunities associated with these events.Stay tuned for more details regarding our upcoming conferencesvia Twitter
@CloudSummits
.
Can Kachingle Save Freemium?
by the Softletter Staff
Beginning in 2009/10, freemium in SaaS became a hot marketingtopic in SaaS. Since the market’s rebound beginning in the 2004/5timeframe, a sizeable number of SaaS firms have offered freeonline versions of their product (and by free we mean a productthat provides at least a baseline level of functionality at no costwith no restrictions or crippling functions (such as watermarkingimages or preventing files from being printed). In the 2012Softletter SaaS Report, which will be released next month, 27% of the participating firms stated they offered a freemium version of their product, with another 11% stating it was underconsideration.
The Problem with Freemium
Despite the excitement (and in too many cases, hype)surrounding freemium, this pricing and marketing approach toSaaS has inherent problems. First, and most important, is that notall markets are a good match to the freemium model. With veryfew exceptions, products that feature a freemium option can beclassified as “commoditized” or broadly horizontal. Examplesinclude such systems as DropBox (file transfer and sharing),Carbonite (Internet-based backup), AnyMeeting (free webinarsand screen sharing), etc. While not a SaaS product, SpiceWorks (asuccessful desktop network design tool that uses embeddedadvertising to generate revenue and which we suspect has a SaaSfuture) is also an example to keep watch on.By contrast, firms targeting their products at most vertical marketsand/or that address “critical” company and enterprise needs don’tnormally use a freemium approach. Markets such as ERP,accounting and finances, asset management and tracking,compliance regulation,and health care management are in themain devoid of freemium options.The second problem is that of psychology. The freemium modelinduces two subconscious barriers to purchase. The first is the “I’lllower my expectations to keep my free deal.” This syndrome leadsthe freemium subscriber to accept product limitations and developworkarounds in order to maintain their free deal.The related syndrome is the "freemium generates contempt"effect. As a subscriber lowers their expectations of a system, theyoften become more interested in alternate, paid systems if theirneeds begin to outstrip the capabilities of their freemium system,
even if the paid version of the freemium productpossesses the features/capabilities the subscriberbelieves they need.
The psychological hurdle of paying forsomething you’ve received for free is sometimes too high for afreemium subscriber to jump.IN in SaaS: DRAWING A LINEIN THE SANDMay 2010, SILLY AGILITY, THEMYTH OF THE SAAS AGILEPRODUCT MANAGER April 2010, SELECTEDHIGHLIGHTS FROMSOFTLETTER'S 2010 SaaSSURVEY, PART II OF IIMarch 2010, SELECTEDHIGHLIGHTS FROMSOFTLETTER'S 2010 SaaSSurvey, PART I OF II
Subscribe NowCONFERENCESThank you for makingAustin a great success!SaaS University 2012
:Boston, October 2012
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The third problem is conversion to sales, a problem that hasplagued the freemium model since its inception and ties directlyback to problem two. In the 2012 Softletter SaaS Report, 72% of companies offering a freemium option reported conversion ratesof 10% to under 1%, with the mean clustering around 1% to3%. Many companies offering freemium products have foundthemselves being suffocated under the pressure of growingsubscriber bases that while generating increasing infrastructureand operations costs aren’t conterminously generating revenue.Often, companies offering freemium programs will kick start theirproduct launches by promotions that market into well establishedmailing lists and contact databases and enjoy early highconversion to sales rates (typical conversion rates range from 10%to as high as 50%+).However, once these initial resources areexhausted, conversion sales quickly fall back to the 1% to 3%median (and it’s quite possible to see far lower conversionpercentages if your freemium program isn’t bolstered by avigorous and ongoing marketing campaign to encourage purchaseof a paid version of your product).Problems with freemium conversion rates have lead many earlyproponents to back away from the concept. For example,37signals, provider of Basecamp, a low-end project managementsystem whose founder Jason Fried was an early advocate of freemium, "technically" provides a free version of its product butfinding any mention of it on the website is very difficult. Othercompanies that dropped or deprecated their freemium plansinclude CrazyEgg (website heat maps), Viddler (video hosting)Pluggio (Twitter browser plug in), and Instapaper (web pagesaving app for iOS). An interesting side note is that SaaS freemium conversion to salesrates track the historical conversion figures seen over the last 30+years for desktop "freeware" and "shareware" products. A criticaldifference is that desktop companies do not have to support thecomplex and expensive product delivery infrastructure that'sinherent in SaaS.With the above in mind, we found the recent introduction of theKachingle Premium system (
www.kachingle.com
and
www.kachinglepremium.com
) very timely as it promises tohelp companies address many of the issues plaguing freemium.Kachingle Premium is aimed at SaaS companies with freemiumprograms. The system is a SaaS product network that enablesparticipants to create virtual bundles of both on demand and onpremise applications for marketing and promotional purposes. Inits initial release, Kachingle works as follows:The system provides up to 20 different on demand and onpremise applications that a subscriber can access or licenseby subscribing to Kachingle for $5 per month. Theproducts provided by SaaS vendors for Kachingle bundlingare not freemium offerings (assuming they offer one andthis is not a Kachingle requirement) but paid versions of their product, usually a first level offering. Kachinglevendor members must implement an API into theirproduct that allows Kachingle to communicate with thevendor’s system. Once someone subscribes to Kachingle, they can, if they’rea freemium subscriber, immediately access a paid or"premium" version of their SaaS product. If they’re not acurrent subscriber, after they’ve gone through the vendor’ssign up process, they are provided access to their paidaccount.The definition of a paid or premium product is defined bythe SaaS vendor. While the most popular model isadditional features, extra storage, increased bandwidth,extra accounts, additional projects or users and so forthare also used as criteria.Encouragement to subscribe to Kachingle is designed to begenerated by the network's vendors, who are expected toadvertise Kachingle into their freemium subscriber basesand up sell them to a paid product version.
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SaaS University Journal, April 2012, features analysis of Kachingle Premium for Freemium Applications
Softletter, the software industry's source for benchmarks, metrics and information shares their views on Kachingle Premium, and whether it can "save freemium."
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