Freemium doesn’t work

Most of my work is about deconstructing every part of building a strong small business, and then piecing it back together, except through a community lens.

I think the approach to most business areas should be different if you’re building a community business.

Selling is different in community

Hiring is different

Operations is different

Marketing is different

It is natural to try to adapt tactics from other business structures… venture backed startups, creator economy businesses, Fortune 500 companies, etc. But community is a whole different beast.

Using what works in other business contexts won’t always work in community, and worse, it can waste your time, drain your resources and burn you out.

A perfect example of this is the practice of people starting free communities as a way to hook new members and eventually upsell them a paid membership offering. This is something that works well in software businesses. You give users a way to experience what you offer, with a paywall to some of the more interesting features as an incentive for them to pay.

As they get familiar with your product, they constantly find reminders that there’s a more premium experience if they make an investment.

In community, the idea is that you gate some of your content, events and other experiences. Members will be so excited about your free community that they will be eager to see what else is possible for them once they upgrade. You’re able to get a high number of people in the free community and eventually a percentage of them become paid members.

Sounds great in theory, but it doesn’t work. Here’s why.

If your free community is any good, it’ll be enough for most people.

Communities are inherently overwhelming. There are always events you won’t be able to attend and people you won’t get to connect with. There may be multiple things happening at once and it’s on each person to choose their own adventure. So people aren’t generally looking for MORE when they join a community. They’re already feeling like they’re missing a few things (which is okay!) and that doesn’t put them in the right place to buy more community.

It is very likely that your free members and your paid members are different people.

Unless you have evidence that your members can start for free to get a sense of your community and will convert to a paid offer, your path from free to paid is just an assumption that hasn’t been proven. In many cases, people who sign up for free communities are on different growth journeys from people who sign up for paid communities. So you end up building 2 different communities, which is hard!

Communities require member investment.

This means that if it’s too easy to join… it’s free, there’s no application, marketing makes it sound like they’re doing the community a favor by joining, then members won’t value it. If members don’t value the community, they will show up less often and the overall experience will suffer. Your marketing and positioning should make it clear that by joining members will gain a lot AND there will be actions expected of them too.

The most important reason to consider not using a freemium model is that connecting people is valuable and takes a lot of work. If we want members (and society in general) to value that as something they should pay for, we shouldn’t give it away to anyone who clicks through.

I talked more about this spicy take on freemium on the Community Experience podcast with my internet friend Jillian Benbow here. I love Jillian’s work at Smart Passive Income and use it often as an example of how to build a well thought-out, balanced community experience. It was fun to nerd out with her! I'd love for you to listen, and let me know what you think.