No Such Thing as a Free Lunch

For many businesses, especially startups, cost is sometimes the unfortunate bottom line when it comes to business expenses. And, even when it’s obvious that the less-expensive product or service is of lower quality, it may be all that the business can afford.

That’s why it’s no surprise that some businesses are attracted to free (AKA “freemium) business apps. Even though decision makers realize that the freemium option is likely going to be unreliable, unsupported, and may even become obsolete, they are often willing to take the chance, in order to save money.

This week, 16 Ventures published The Reality of Freemium in SaaS, and it has resulted in a lot of online discussion about the role of freemium—and, specifically, freemium apps for businesses. Phil Wainewright provided an insightful addition to the discussion in his blog post, Why freemium is bad for business. In his post, he presents four arguments for why businesses should not be “lured into using free” for their business. We believe that one particular point is especially persuading: with freemium apps, vendors don’t invest in instrumentation that is vital for business customers.

If there’s no fee, there’s little incentive to monitor usage patterns and service levels. Again, the infrastructure for this kind of capability is expensive, and if a vendor is focused on the kind of mass market that a free product has to appeal to, it’s unlikely to want to spend money on features such as SLA monitoring, uptime dashboards, real-time user support or detailed usage pattern analysis. This limits its ability to offer differentiated services that performance-sensitive business customers will pay good money for, forcing it to focus even more on volume rather than quality.
– Phil Wainewright, Why freemium is bad for business

We hear from businesses every day who are leaving freemium email services, in particular, for this exact reason. When there’s an email server outage, their business communications come to a standstill—and there’s nothing they can do about it. No one they can call. They are left without their vital communication channel. And if the business experiences data loss, there’s often no backup or disaster recovery system, and no SLA to fall back on. Data loss is a real risk with freemium services, and the inability to recover email data could be a catastrophic loss to some businesses that rely on email for records, documents, and contract management.

At Rackspace Email & Apps, we believe we have a solution that works for even the most budget-conscious businesses. At only $1/mailbox, businesses can have a full-featured, email-with-your-domain email solution, with best-in-class spam and virus protection, collaboration, mobile access, automatic backups, easy data recovery, and the industry’s most competitive SLA. Complete with our award-winning Fanatical Support, available 24×7×365 by phone, chat, or ticket.

So, even though freemium apps may seem attractive in some situations, business users should tread carefully. As Phil Wainewright states, and we couldn’t agree more, “There’s no such thing as a free lunch.”

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  1. We switched to Rackspace Email from Google Apps.  As a nonprofit, Google Apps was free.  Google is a great company that does great things, but it wasn’t right for our email purposes. Google has gone down. Rackspace has gone down.  Downtime and glitches happen in the tech world.  The question is who is going to hold your hand and be accountable when that happens?


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