Wednesday, March 12, 2014

WIX Freemium Business Model Isn't Worth Paying For

  • Wix converts a small percentage of customers to paid users.
What Is
  • is software which allows users to setup a website for free. Think of it as the 'freemium' model for websites. The company offers it's software to design websites & free web hosting to draw you in, and when you needs a shopping cart or other functionality - you pay.
Registered Users: 42,100,000
"Premium Subscription" Users: 790,000

584 Employees as of December 2013
"we continue to employ zero sale people" - Nir Zohar - Wix President and COO

2013 Financials 
Revenue 80.5m
R&D: 26.5m
Selling & Marketing: 52.6m
G&A: 6.1m
CapEx: 3.1m

(user data, financials & quote from February 2014 - Q4 2013 Earnings Call)

So maybe the low number of paid users is due to Wix focusing on the software/product rather than up-selling the 42 million registered users. However, if the software Wix was building was so amazing - why haven't more users converted to paying users? Forget answering that question - lets assume Wix software is amazing .... it's obvious most just want to use it for free!

Why do so many just want to use Wix software for free?

Here are the Wix premium subscription offerings:

Notice No Mention Of Software Other Than Shopping Cart

Basic Revenue Model Analysis
  • You only need to pay if you:
    1 - Want your own domain
    or - Need a shopping cart
    or - Don't want ads showing on your site
    or - Need 'VIP Support'
    or - Need more storage/bandwidth
    AND - want to keep using Wix software.
Not saying Wix can't (or doesn't) make money marketing (e-mail blasting) the 42 million accounts, or can't license the software to other companies, or change the way they convert free users. But for now, the premium in their freemium model is not selling.

The most important thing to remember: in order for Wix to make money today - a website owner needs one or more of the premium options, otherwise you just use Wix for free. Wix has done a magnificent job finding people who sign up to use the software for free, they haven't done a great job at finding people who want to pay for the add-on privileges Wix charges for.

Why don't more registered users want to pay for the premium features Wix offers?

1 - Competition. Remember, Wix offers their proprietary software for free and only charges you for add-ons where competition runs deep. Shopping cart integration, providing VIP hosting support, and bandwidth are chalk full of competitors. If you're curious, the big boys include Amazon, ebay, Rackspace, Google, GoDaddy, Adobe, Microsoft .. ect ... ect.

2 - Most People Just Need A Free Website. Wix's paid vs free user ratio proves this. Period. However, Wix marketing strategy & software targets the do-it-yourself type startup websites. You are all aware a huge percentage of small businesses fail. Websites are no different and are easier to give up on.


Over 40,000,000 users have registered on Wix and decided there was no reason to pay anything. It's possible Wix provides no real benefit to ever pay. Possibly the users decide the software isn't worth paying for. Maybe the majority of people don't want or need to pay for a website. The numbers suggest Wix proposition to customers to pay isn't working, and shares will continue to trend down until the company reverses this trend.

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