The Freemium World
You might not know the term but chances are that you’ve used a freemium product. Popular among software and web applications, freemium is a form of commerce that makes sure potential customers can freely use whatever type of product a company is providing a freemium version of.
The word already explains a big part of it, freemium products are free, but do not contain the same type of benefits as the money costing premium version of the products. Like this, you can attract customers and make them happy, and at the same time introduce them to your premium product. Sounds good right?
Freemium can be advantageous to basically every sort of service. As long as you have a versatile product and a good base set of functions to provide for free, you’re good to go. It can be especially useful for cloud based services since providing extra storage for your customers logically requires money to maintain servers, hence the premium upgrade. Providing extra support can also work well with a freemium model, you offer a good product for free, but extra customer support comes with the premium pack.
3 Different Examples Of Freemium
Spotify
One of the most popular examples out there is most likely Spotify, which allows people to use a free version of their product with one core trait of the application: listening to music.
Free users can shuffle music, not skip or select, and get ads in between songs. The premium version solves all of this. But also adds way more benefits. A good example of getting customers hooked on your product!
Skype
Skype is a freemium product that offers a bit more compared to Spotify. It’s even supposed to be 100% free and the company does not expect users to pay for it. However, additional storage or add-ons are not free and users find themselves paying for these, only if they want to or have to. It’s not a real necessity.
iTunes
The base-app itself is free and will most likely always remain free, allowing users to manage and sort their digital music collection easily and comfortably. Revenue is made by third parties, artists and record labels, who distribute music around the application. iTunes takes a share and voila.
Now that you have a basic idea of the different models of freemium commerce, you might be able to implement it into your own company. Why should you do this? Because it’s a great way to attract customers and give back to the community. Freemium users will be grateful and understanding of the premium benefits costing money, as long as you make sure your freemium version is not some sort of restricting free-trial version. You want the freemium version to be handy and useful, not limited and stressful.
Some quick pro’s and cons of Freemium:
Pro’s:
- No usage barrier
- Easy growing user base
- Advertisement
Cons:
- Difficult revenue
- Extra work
- Risky
So make sure before going into this freemium world with complex varieties & possible con’s. Consult us for more info on choosing the right business model for your startup!
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