Freemium :
Freemium is a business model that offers basic services or products for free while charging a premium for advanced features, functionalities, or virtual goods. The combination term "free" and "premium," reflects the dual nature of the offering. This model is widely used in software, digital services, and online platforms to attract a large user base and then convert a portion of those users into paying customers.
What are various elements of Freemium Model?
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Free Tier
This tier offers essential features and functionalities sufficient for basic use. It attracts a wide audience by eliminating the initial cost barrier.
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Premium Tier
This tier offers advanced features, enhanced functionalities, or additional services that are not available in the free tier. Users need to pay to access these premium benefits, usually through a subscription model or one-time payment.
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User Conversion
A freemium model converts free users into paying customers. Strategies to encourage conversion include offering time-limited trials of premium features, highlighting the limitations of the free tier, and providing exclusive content or benefits to premium users.
Lets Understand with an example
Spotify is a well-known example of a freemium model. Spotify offers a free tier with ads and limited functionalities, such as shuffle play or ability to play desired song on mobile devices. The premium tier removes ads, allows offline listening, and provides high-quality audio streaming. With a free option, Spotify attracts millions of users and then converts many of them into paying subscribers.