When will the "free edition" work?
After writing the previous post regarding the "free edition" option, I felt there was some injustice about it. The bottom line was that it's practically impossible to get anything useful from having a "free edition" and that's not true. It does work in some cases. I wanted to explore these specific situations.
First, one of my main arguments was that it is a different product, aimed at a different market segment, so it will need it's own marketing efforts and it will not contribute to the marketing efforts of the main product. This claim is based mostly on the concepts described in Geoffrey Moore's "Crossing the Chasm". While I do think this is a great book, I also think that: (a) like most rules, there are exceptions and (b) the internet has changed the market. Especially evident is the long tail effects on the web as a consumer market.
Second, one may argue whether this is a different market segment to begin with. Well, there's no definite answer. In my opinion, it mostly depends on how you distinguish between your editions. For example, a CRM product with a free edition that handles up to 50 clients is probably targeted at a different segment. A photo site that offers extra space for subscription fee is probably targeting the same segment. If you are heading towards the same market segment, then your marketing efforts are joint, you stay focused on your market and it is more likely that you will see contribution to your overall sales.
Another point which I neglected in the previous post is web applications "free edition". Although I focused my research on classic software products, it's not very different when it comes to web applications. I think the key point to remember is that you will have much more users for the "free edition", thus, you will need more servers and bandwidth. As with classic software, providing a poor service (e.g. slower servers) to your free edition users will have a counter effect, so plan accordingly. And, reiterating the point, if this is a different market segment, this is exactly what "diffusing your focus" means.
