Freemium vs. Paid Models – How to know which one makes sense
Very good article about a formula that actually lets you determine whether a freemium or paid model is right for your business.
With this in mind, Mullany’s equation for freemium businesses looks like this:
Price Paid by Premium User – Cost of Proving the Service to the Premium User – [ (1/Ratio of Premium:Free Users) * (Cost of Free Service Per User + Cost of Marketing to get a Free User) ] = Profit Per Premium User
Check out the full article over here.