What is Freemium ?
Freemium is a subscription billing strategy where customers are offered a basic version of a product or service for free, but must pay to access premium features or additional functionality. This model is often used by businesses to attract a large number of users, and then convert a portion of those users into paying customers.
The free version of the product or service is usually limited in some way, such as having reduced functionality or limited access to features. This allows customers to try out the product or service and get a sense of its value before committing to a paid subscription.
Once customers have signed up for the free version, the business can use a variety of tactics to encourage them to upgrade to a paid subscription, such as offering free trials of the premium features, sending targeted promotional offers, or providing incentives for upgrading, such as discounts or exclusive access to new features.
Freemium can be an effective subscription billing strategy for businesses looking to acquire a large number of users quickly and then monetize that user base over time. However, it is important to strike a balance between providing enough value in the free version to attract users, while still providing enough value in the premium version to justify the cost.
Cases
5 examples of companies that use a freemium business model strategy :
- Dropbox: Dropbox is a file hosting service that allows users to store and share files online. The company’s freemium model offers users a limited amount of storage space for free, but users can upgrade to a paid plan for additional storage and features.
- Spotify: Spotify is a music streaming platform that offers both a free and a premium version of its service. The free version is supported by ads and has limited features, while the premium version offers unlimited ad-free streaming and additional features like offline listening.
- Hubspot: Hubspot is a marketing automation and customer relationship management platform. The company offers a free version of its software that includes basic features, but users can upgrade to a paid version for additional features like advanced analytics and lead scoring.
- Hootsuite: Hootsuite is a social media management platform that offers a free version of its software with limited features. Users can upgrade to a paid version for additional features like social media analytics and team collaboration tools.
- LinkedIn: LinkedIn is a professional networking site that offers both a free and a premium version of its service. The free version allows users to create a profile, connect with others, and search for jobs, while the premium version offers additional features like in-depth analytics and the ability to send direct messages to other users.