Xojo Ends Freemium Model

This week the Xojo blog announced that they were ending the Freemium model and going to back to the standard 30 day trial period model. As you would expect this has led to an outcry of folks on the forums and there are lots of opinions as to why Xojo is wrong to end the Freemium model. They’re wrong and here’s why.

Xojo said that the Freemium model increased downloads but didn’t change buying habits. The original thinking was that more downloads would get more eyeballs and thus more revenue in the long run. The IDE was free to try and use until you wanted to do a final executable.  It didn’t.  Period.  Their two year experiment with the Freemium model failed.

I don’t mean to belittle the hobbyist developers out there, but there is ample evidence that many of them simply just ran their apps in the IDE rather than compile them as standalone executables, thus not even purchasing an inexpensive desktop license. Obviously this was not the intent of the Freemium model and certainly violates the spirit of the model if not legally as well.

We can argue all day long as to why the freemium model didn’t attract more paying customers. I’m sure there is not just ONE reason but combinations of many smaller issues and here are some wild guesses. Perhaps desktop programming is experiencing a decline and perhaps web apps aren’t growing as much as once thought. Perhaps iOS isn’t an attractive target without Android. Perhaps the lack of business-only features hurts them. Perhaps the IDE design pushes some people away. Heck, I’ve asserted for a long time that the insistence of dumbing down the IDE in favor of newbie programmers is a detriment to the health of the platform. <Insert your favorite theory here>

One argument I might buy is that they didn’t give it a long enough try.  Some times it takes a while for things to take hold.  Add in that two years ago they changed the name of the company/product and lost whatever internet search rankings they may have had and it’s quite possible that it’s only now that people are finding Xojo.  It doesn’t matter now.

Regardless, the bottom line is that the Freemium model didn’t increase revenue for Xojo. At best, it means that revenue stayed the same and, at worst, they lost revenue. No company can stay in business by having static or negative revenue.  Expenses only go down through layoffs and no one wants that.  It’s the right business decision or otherwise we might not have our favorite development tool around in another year or two.

So while it’s sad it didn’t help them I can’t complain. They know the financial numbers better than we ever will. They told us the reasons so it’s time to move on.

What do you think?