Growth Hacking

How MailChimp was able to increase their profit 650% in a year by changing nothing except this one thing…

Written by Nizam

Because after MailChimp went freemium:

1. They grew their user base 5 times in one year.
2. Their profit increased over 650%.

So you need to switch to freemium right now too. Right?
Wrong.

The most valuable part is WHY MailChimp switched to freemium.
Here’s their story:
1. From 2001 till 2009 = for 8 years they never thought about freemium. They were focused on growing profits.

2. By 2009 they had enough profits to think about freemium, so they made some serious calculations:

2.1. They knew that the average ratio of free-to-paid-subscribers is 9% across all industries.
2.2. So they calculated how much it would cost to handle 10 free users per 1 paid.
2.3. They put serious thought into their deliverability impact, abuse vectors, staffing requirements,                         and on and on.
2.4. Their calculations showed that there could be potential.

3. They ran a bunch of price A/B testing experiments and tracked:

3.1. Profitability.
3.2. Changes in order volume.
3.3. Downgrades.
3.4. Refunds.

4. Sitting on tons of pricing data they found that, for them, freemium is more profitable than any other pricing model.
5. This is why they decided to switch to freemium.

Deatails here

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Nizam

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