Freemium PLM – Yes or No?

Freemium is a business model became very popular among internet start-ups and established companies. Services like LinkedIn, Flikr and Skype are using freemium business model. If you are not familiar with this term, take a look here. Also, I’m recommending Anderson’s book.

Why do I think freemium model can be successfully applied to PLM?

1. It will remove the initial barriers of PLM evaluation, value generation and long sales cycle.
2. It will allow to create a significant community of customers.
3. It will improve a quality of PLM software and generate the new barriers for competitors.

Nevertheless, can be a potential scope of free PLM? I’d like to raise few options. However, I’m not pretending on bulletproof definitions. Chris Anderson defines the following options for freemium model implementation:

Feature limited. In general, the most efficient, but at the same time, the most problematic for PLM. How to find a good combination of paid and free services?

Time Limited. Another interesting option. Full functioning PLM becomes paid after one or two years of work in the organization. This can be a good chance to show ROI before you will be taking money from customer.

Capacity limited. This is a very popular option. Limited storage, limited number of licenses.I’m expecting some promising results here.

Seat limited. You can provide PLM system fully functioning to the limited set of user in the organization. Assuming PLM global plan will be realized. This is a point of time, when a customer starts pay for the service.

Customer Class Limited.
To split small and big customers? OEM and Suppliers? These are also very interesting cases that can be realized and, partially realizing now too.

So, what is my conclusion? Do you think “free” is a bad word in the context of PLM or even wider, enterprise apps? Free becomes a very popular word, but still I cannot see good examples of freemium model in enterprise application. Do you think an idea of free+license combination in Product Lifecycle Management can be interesting and will catch the interest of customers?

Just my thoughts, please let me know what do you think?
Best, Oleg

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12 Responses to Freemium PLM – Yes or No?

  1. Tom van Oost says:

    Hi Oleg,

    Interesting idea. Some thoughts:
    * When software is free, how to deal with support? Or is it possible to build business on services and not on the product itself?
    * Freemium goes usually together with SaaS. Are companies ready to store their IP in the cloud, even when software is free? (common question of course)

    Best,
    Tom

  2. Hello Tom, Thanks for your comment. 1/Free software doesn’t mean an absence of contract, agreement, etc. It potentially just means you are not paying for licenses. 2/Yes, you are right. freemium is mostly popular with SaaS/online/internet apps today. The question about IP is critical, and I’d expect companies to review their relations with SaaaS/Cloud offering soon. I discussed “cloud” multiple times on my blog. You can follow these posts by “Cloud” tag.
    Best, Oleg

  3. Martijn Dullaart says:

    Hi Oleg,
    I personally think that Feature and Time limited are the best approach (possibly even a combination of the two). Let me explain why:
    1/ Both Seat and Capacity limited is something that can stand in the way of mass adoption in the organization. If an organization is getting excited about the PLM solution, you should encourage them to use it. With Seat/Capacity limited, this is more problematic.
    2/ Feature limited also allows users to first get acquainted with the basic functionality of the PLM solution before being overwhelmed by all advanced features.
    3/ I like time limited because it allows the organization to see the benefits before they have to invest.

    For Customer Class limited I see something like a combination of one of the other models e.g.: For small business we offer a feature & time limited deal. While for large companies we only offer a time limited time.

  4. Manuel Joseph says:

    Hello Oleg-
    I dont think of PLM products coming for free, but any vendor could find a prospect for PLM implementation in steps
    1) ADM – Application data management – With feature limited only. There are vendors providing this such as SOlid-Edge and Insight(Free); Autocad and Vault(free -Basic functionality only).
    2) Once customers are ready to move on, they can move to PDM, Product Data management. Of course the above combinations wont work, so they move to a different plm tool such as teamcenter.
    3) Then comes PLM. More features, and bigger tool such as Teamcenter + ERP integration+ SAP + ..+ ..

  5. Martijn, Thank you for your thoughts. It makes sense to me. Probably “Feature” is the best one. However, to create right features split is not a simple task. This is something that will define your free/paid combination. More on the “free” side and your dead on $$$, but if your “free” is not good enough you will die too… Great discussion. Best, Oleg

  6. Manuel, These levels indeed something that reflects existing product configuration. But, even if Vault, Insight or PDMWorks Workgroup is free, they are not considered by customers as a step towards something next. Customers see it as a separate offering. The biggest problem, I see is a disconnection of these product lines in customer’s eyes. Don’t you think so? Best, Oleg

  7. Martijn Dullaart says:

    Another thing is that when you use Feature limited, do you also support to pay per extra feature (maybe very complex) or will it be a feature set, where the user only wants one extra feature but he gets a lot more that he does not really want to pay for, or is it more like free (basic) version vs paid (everything) version (which makes the that statement even more valid?

  8. Martijn, Pay per extra feature is interesting, but really can work only in SaaS implementation when it doesn’t require installation, etc…. Best, Oleg

  9. Manuel Joseph says:

    I see what you are saying. Hmm, given that as flickr or linkedin offers, a SERVICES based freemium will play better than feature based. I am assuming that services and features are different in PLM context.
    For eg. Multi-site functionality is a feature, but there can be multiple services that can use Multi-site.
    Customers should be able to taste everything before they go an get it from a bakery. ( sorry its time for lunch here).
    Comments?

  10. Manuel, I’m confused to differentiate “service” and “feature”. For me it is the same… Sorry, what is difference?

  11. Manuel Joseph says:

    Basically, everybody gets the full blown implementation of PLM, but..lets take blackberry as an example.
    blackberry has 3G and wi-fi “features” for free because it comes with it, but that doesnt mean, they get free “Services” such as MobilTV or GPS features or others. To use them, they subscribe for it.

    SOA – Service oriented architecture concepts.

    Am I thinking the wrong way? or this is not possible.

  12. Manuel, I got you. Well, in the context of what I posted, feature=service=capability=whatever else customer can consume. You put more technical semantic into that, which is ok. Great discussion. Best, Oleg

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