Enterprise Software should be Free!

For the past few months I have been thinking hard about the idea of freemium software.  I am doing this because I keep getting feedback from potential customers that enterprise software is too expensive. In deal after deal we keep winning because the existing solutions are very expensive and we provide a much better economic benefit. In thinking about how to compete with a much larger established software company, price is always an easy way to go, but what do we get out of it?  If I charge a little or free how can I make money? I think that freemium is a way to cut marketing and sales costs.  So then I have to decide is this a way to go?

A great post today on Techcrunch “Is Free The Future Of Enterprise Software? Yes And No.” by Aaron Levie the CEO and co-founder of Box.net talks about this very problem. The best point I got from the article is “Freemium is also great strategy for products that have high switching costs.”

We are getting close to releasing true enterprise software using this model. I hope that it will be very disruptive to the industry and can help us boost sales. I am very worried that I may be making a mistake, but  everything I am reading and the folks I am talking to all support going in this direction.  This will become a real inflection point in our industry. Why do I think this? Well the worst thing a large business has to worry about is the small guy who can reproduce your product and only needs to make $100,000 to make it worthwhile.  I am looking at a market of tens of millions and would be happy to have a million. Existing companies could never do this because it would destroy their business. I think the real trick here is not to be greedy and to be innovative about different ways to make money. So to wrap up, our mission here will be to provide a better solution to a critical enterprise software function and give it away for free. Make money by providing value around the edges.

We should be ready soon and I will be shouting from the rooftops when we are ready.