Original Article:
Paperless Post by Valerie Kaplan
https://www.hbs.edu/openforum/openforum.hbs.org/goto/challenge/understand-digital-transformation-of-business/paperless-post.html
“Paperless Post is an e-commerce company that sells online greeting cards, invitations, and stationary. Their value proposition is to combine the modern convenience of online communication with the same personal touch and beauty of a traditional invitation. Users can choose from over 11,000 cards and upgrade features to create a completely custom and personalized message for their guests… In an interesting twist, Paperless Post went from digital to analog when they began to offer physical cards and invitations 2012… Paperless Post earns revenue by selling both its digital and physical products. It has zero advertising and instead uses a freemium pricing model to attract and then upgrade its consumers… As of today, the platform offers approximately 750 free pieces that include an assortment of simply-designed invitations and cards. These complimentary items attract first-time users to the platform and help grow future usage in two ways. First, it requires the user to create an account with Paperless. Once they do, it stores contact information for all of their guests/recipients. Each time you send an invite from Paperless Post, it becomes increasingly convenient to do it again, helping to turn people into repeat users. Second, it also encourages the recipient of any item to create an account. The free Paperless product in essence provides its own viral marketing engine… The freemium model is an effective pricing strategy for Paperless Post for a number of reasons. First, their digital products have an extremely low marginal cost to produce. Secondly, they have built a system with both direct and indirect network effects. Having more users on the platform makes it more valuable to guests and hosts. It also makes it more attractive to design and product partners… The freemium model is an effective pricing strategy for Paperless Post for a number of reasons. First, their digital products have an extremely low marginal cost to produce. Secondly, they have built a system with both direct and indirect network effects. Having more users on the platform makes it more valuable to guests and hosts. It also makes it more attractive to design and product partners”
This article on Paperless Post was insightful as it introduced me to this concept of “freemium.” It also got me thinking about the process of marketing to others and encouraging users to purchase “premium”
