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How would you estimate revenue from a free service with premium content?

Discussion in 'General Business' started by Kaspi, Jan 18, 2016.

  1. #1
    Hi, the title says it. I would like to create an entertainment service, where people could optionally buy additional content for various prices once per a period.

    Any idea how to estimate what percentage from the total amount of users would buy premium and how much would they buy?

    Does anyone have any stats from anything similar?

    Thanks for any help.
     
    Kaspi, Jan 18, 2016 IP
  2. pmspinner

    pmspinner Active Member

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    #2
    Before I invested too heavily in this product, I would do some tests in order to get some numbers on conversions. Freemium models can vary widely and if you're looking to start a business with this model - I'd recommend getting more specific details versus some industry estimates.

    Now I realize it might be a chicken and egg thing, so I'd model ranges of conversions, understanding that it is an undefined variable. Once you established the reasonable thresholds needed for your business model to be successful, you could make an educated guess as to the sustainability.

    eg: if your business model required a premium purchase conversion rate of 80% with an average ticket of $150 - it'd be safe to say that is not likely sustainable.
     
    pmspinner, Jan 18, 2016 IP
  3. R. Martin

    R. Martin Peon

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    #3
    It's difficult to know before creating the site. It depends on the marketing, users engagement, on how much they value your products,, design, etc. Usually 80% of a company's profits comes from 20% of its customers.
     
    R. Martin, Feb 1, 2016 IP