Last week a European company called AimBrain put out a press release touting free use of their voice and facial biometrics solution – for life. The free tier of their service is capped at 1000 API requests per month, available via a hosted service or mobile SDK, but this should be adequate for many small companies or application developers who simply want to “kick the tires”. Click here to see the press release.
The company’s CEO, Andrius Sutas, stated one of the primary drivers for this free usage tier: “We realised that there are many smaller businesses or creative individuals that don’t need hand-holding or to be dragged through the typical sales cycle; they know what they’re doing and just want to use the technology without interference.” Later this year, VBG will release its own self-service product, VBG Pro™, for these very same reasons. More on VBG Pro™ later in this article.
With AimBrain's offer, there is the unstated, yet obvious, business desire to one day have smaller, free tier companies grow into larger organizations, requiring more (non-free) services. Companies in the IVR industry, such as Voxeo (now Aspect) and Twilio have used this strategy to great success. And of course, Microsoft showed mastery of the free-turned-pay software model many years ago. It’s hard to remember the days of Lotus 1-2-3 and WordPerfect, but Microsoft started out with free versions of Word and Excel and the rest is history.
Of greater interest is the long-term impact to AimBrain’s investors. The use of “free” is great to get people in the doors, but this strategy requires a pace of innovation to remain a step ahead of the competition at all times. Most businesses understand that “you get what you pay for”. As long as AimBrain continues to innovate and be better than competitors, free clients will remain loyal – and will hopefully grow larger. But, business is business, so functionality and requirements will always outweigh free offers that don't meet a company's needs.
The free strategy also requires market economics from non-free customers that support subsidizing free customers over time. Most startups and small companies will fail to achieve critical mass (and be in the position to becoming paying customers). Over time however, AimBrain may be left with an increasingly large population of small and stagnant users. This will increase support costs and siphon company resources. It will require investors to be patient until the balance of paid vs. free customers becomes clear.
Since our inception in 2009, VBG has advocated the use of free trials. Free trials give prospects direct knowledge of exactly what they can expect when working with us; there is no reliance on sharp sales people and slick marketing collaterals. However, VBG’s free trials are time-based, typically 60 to 90 days, yet are unlimited in terms of API request volume. One recent prospect tested with about 30-50 requests a day during their first month, but then started sending in 20-25K transactions a day for several weeks in a row. That was OK with us, as scaling is a critical piece of functionality to test with any platform – free or otherwise.
Once a prospect successfully completes their tests, we do expect an agreement to be executed, and most important, for payment to begin. VBG’s software, and our team of developers and support personnel, have value. We believe companies should respect the value of their important 3rd party services and be willing to pay for them. From a long-term corporate growth perspective, this is healthy and beneficial for BOTH parties.
This brings up the topic of VBG Pro™. Later this year, VBG will introduce this 100% self-service offering of its most popular features and supported languages. We will provide for free enrollments for the life of the application, but will only provide a large bucket of free verifications to get started. It will be more than enough to let a developer or company decide if our technology will work for them (or not). However, we will require the account to be “topped off” for continued use, using a number of pre-pay buckets starting as low as $20.
It will be interesting to see which approach the market favors in the long-term.
Peter is an avid reader, particularly of high-tech topics. These articles express his opinion only, but he hopes you enjoy them!
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