Switch to freemium: a year later

On the first of September last year, we ( MailChimp team) announced that MailChimp is becoming freemuim. At that time, the number of users was 85 thousand people. Now, a little more than a year later, their number has exceeded 450 thousand. Yes, yes - our user base has grown fivefold over the course of one year.

But not everything is so simple and effective in this model. I heard discussions about the success of our service, which was associated specifically with the freemium, and this is alarming to me. People look at us and try to launch their own projects in our image and likeness, without knowing either our success story or our motivation.

A bit of statistics about us:

• Every month in our regiment there are 30 thousand new users, of whom four thousand are solvent.
• Since we switched to freemium, the number of paying customers has grown by more than 150%, while profits have risen by 650%. And our profit began to grow mainly due to the fact that our expenses began to decrease.
• We deliver 700 million emails per month.

Most of our customers are extremely small businesses with extremely small subscriber lists. So, at the end of August the ratio of large / small looked like this:


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We try not to be greedy by providing a wide range of functions for free, and therefore users do not leave us when their lists no longer contain the required number of contacts. They are satisfied that they can grow with us and the Premium account is no longer considered to them something very heavy.

If you want to understand our transition to freemium, then you should learn more about our company. First, at the time of making such a decision, we were not a startup. We already had years of solving problems, developing experience and studies, along with tons of mistakes. It also helped that we started in the middle of the economic crisis (see: “Start in a shoddy economy” , Paul Graham).

In general, listen to this guy:



The second thing that makes us not quite a regular service: we do not distribute a cut-down product for free, offering to upgrade to the paid version in order to start using all the functionality. After all, we have spent years to create a powerful, affordable, self-regulating product. By investing heavily in our API , we got 70 thousand users. The clouds made our service cheaper, we took advantage of this and with the savings we made many things free.

What I am leading to - if we were freemium from scratch, the story would have evolved quite differently.

At the beginning of this year, the Freemium Summit , in which Matt Brezina (Matt Brezina) expressed the opinion that the freemium idea itself is not new - just came up with a fresh word. But IMHO, the key to his presentation was this slide:



Ten to one. This is the ratio of free to paid users. There was a lot of interesting things, but this slide was stuck in my brain. Guys, for each client you pay ten dependents on your neck. But it should be so. But we thank all our customers, handing out T-shirts , for example. Did I mention the free Social Pro account by the end of March 2011?

Our work has become a lot of serious things - personnel issues, planning, financial issues. I say once again: in order to switch to freemium, we conducted a thorough analysis and created a thoughtful strategy. Studying the statistics on users, assessing their impact on us, we came to the conclusion that this year we will grow twice. But if you think that all this is done for the sake of maintaining competitiveness or is part of the pricing policy, then I will disappoint you: we do it because it is interesting. If there was no fan here, why would we start doing this?

^{It was a free Russian retelling of the next publication .}