A frequent complaint about web startups is that despite being cool or popular, they lack a clear business model. One textbook example was YouTube. The service had millions of adoring users, but financially speaking, YouTube ran at a loss until Google bought them out in 2006 for $1.65 billion. For a time, the default business model for high-traffic but unprofitable websites was displaying ads. But since effective advertising depends on more than just mass exposure (like targeting) it is not always an effective business model.

A better answer for many has been the “freemium” model, where a company offers its core product or service for free and charges for advanced or special features. Rumors have cropped up in recent years that web giants like Twitter and Facebook, for example, are considering freemium strategies. Below, we’ll profile seven companies that have already mastered the freemium model, and how they did it.

Skype

Web-based telephony company Skype provides an excellent example.

Chargify is officially entering into public beta today, and we couldn’t be more excited!

Having originally launched at the TechCrunch50 Conference (http://techcrunch50.com) in San Francisco, CA on September 14th, 2009, we’ve been steadily growing our beta list this past 6 months while making numerous improvements and adding new features.

Some highlights/ improvements include:

• Through today, Chargify has accepted over 2000+ companies into our beta and we’ll be letting any that are pending in over the coming days – allowing any and all companies who sign up going forward into the public beta

The team here at Chargify has been hard at work on a bunch of new features. We just flipped the switch on two of these: Prorated Upgrades/Downgrades and Metered Components.

Metered Components

Metered Components give Sellers the ability to charge for a product on a per-usage basis. For example, a cell phone provider could charge $1 for each text message that was sent, or a Web Hosting company could charge for storage by the number of gigabytes used. Creating metered components is quick and easy. Simply give the component a name, specify the unit used to measure it, and give it a per unit price. Usage of metered components is tallied throughout the billing cycle and the charge is seamlessly integrated as a line item on the Customer’s next invoice.

For more information on how to create Metered Components, and how to record usage via the API, see:

Plan on attending SWSW (South by SouthWest) 2010 in Austin, TX from March 12th - 16th? Or are you already at SXSW enjoying Austin? If so, you are in luck because the Chargify team is there too and will be through the 16th.

Curious to meet the team behind the company? Or maybe you just want to get your hands on some Chargify schwag?

Either way keep an eye out for us. if you need a reference as to who we are check out our About Us page and put a face with the names.

We have a few surprises up our sleeves as well so be sure to keep tabs on us on Twitter @chargify.

We’ve been working hard over the last few months on releasing new features for Chargify, and have been excited with what we’ve been able to accomplish in such a short amount of time. And along with the performance and feature set of the application, we want to make sure Chargify looks as good as it works. So this week we’re rolling out the first in a series of user interface design updates that will continue to make Chargify a pleasant and beautiful environment in which to work.