Why your startup should not start with a Freemium biz model

I'm reading Ash Maurya's book Running Lean that I picked up from AppSumo's Lean Startup bundle [The bundle gives you $6000 worth of ebooks and web app subscriptions for only $99. Its a total bargain, but only 3 days to go before the offer expires, so get it soon - use this link and I'll get a $10 credit :)].

There is a section on the freemium pricing model and why startups should not start with freemium. This part really resonated with me because we fell into many of these problems early on. The reasons against freemium are:

• Low or no conversions: Startups often give away too much in the free plan, leaving users with no need to upgrade
• Long validation cycle: Conversion rates on upgrades are low, so its hard to validate the pricing model
• Focusing on the wrong metric: Causes a premature shift in focus from building the right product for paying customers to new user sign up
• Low signal to noise ratio: Free users may give feedback that paying users dont care about
• Free user's aren't free: It costs time and money to support free users

Do you think freemium works? What are your thoughts?

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