Measuring Freemium with Minutes is easier than with Money

Hudson asked me about using minutes instead of dollars and the trend of the Freemium Rate I described Monday.

Comparing apples to apples, minutes-talked is the only data I have on both sides of the free/fee equation.

Money as a measure is useful. It leads us to the lifetime value of a customer. How can we measure free in dollars?

We might value the free minutes at some averaged rate and compare that to Skype's overall revenue.

Skype earns money from licensing its brand, the rental of SkypeIn phone numbers, from its online store, ads in Skype’s yellow page directory services. Sadly, I don’t have access to revenue data broken out by source.

We might include costs with dollars, seeking profitability or net value of customers. Costs for fee-based services are higher (transaction costs, higher security, admin, sales costs, customer service, technical support, business development) than for free. 

Meanwhile, we have customer behavior in the form of minutes. And the simple freemium rate comparing free to fee. It will suffice.

tags: skype, freemium, metrics, business, strategy, free, skypeout, directory, yp, yellowpages, skypein, revenue, costs

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