Free services with significant COGS (DropBox, etc.) do care. You have to manage costs carefully. Box has laid these costs out very explicitly in its public filings (and Box has moved 99% away from freemium).

Customer support burdens have to be managed. Free users will overwhelm your customer support channels if they are not at least segmented on free vs. paid.

Free users can bring down your NPS/CSAT. It’s natural to not give them as much attention. And the end result, sometimes, is they are your worst proponents. Do you want 100,000 folks saying you are mediocre?

  • Freemium works great if it’s your core #1 plan.
  • Freemium works OK if it isn’t core, but you are 100% sure it’s accretive to your brand & brand marketing.
  • Freemium works OK if the free product is almost just as good as the paid one, and can be deployed very easily.

If not — Be Wary.

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