Have You Ever Used Freemium Business Platforms? Here the complete guide about Freemium business model
Over time, consumers have become more perceptive and hence less willing to pay on things that they could get for free. It isn’t as easy as before to market your products and expects great outcomes like before. In these times, the freemium business model could save you from traditional marketing tactics.
There are several other types of Business Models followed by the startups and some hold a mix of these business models. You could read about different types of business models with certain examples explaining these models into action in our blog “Top 19 Business Models That Will Hail the Startups”
After having an overview of business model functionality, let’s define the freemium business model and further we would throw some light upon ‘what is the freemium revenue model?’
Freemium Business Model Definition
The word “Freemium” is a portmanteau of the words “Free” and “Premium”, likewise Freemium business model has two tiers. It offers two types of products to the customers, ‘free product’ and ‘paid product’. The free product users have limited access to a few features of the product that are unlocked when the person buys the paid product.
For a better understanding of the freemium business model, let’s take an example of the Tinder app. Though it started out as a fully free app to use, it has changed its business model to freemium since 2015. It started charging for some features like unlimited swipes, rewind feature, etc. They are a part of the premium product, Tinder Plus. On the other hand, the free Tinder app gives limited features like a fixed number of right swipes in a 12hr period. However, there can be a match between a plus user and a basic user.
How Does Freemium Business Model Work?
Several factors of a freemium model appeal to the new startups as it helps to scale up the new ventures and attract a new user base without spending money on costly ad campaigns. The main objective of a freemium business model is to convert free users into paid users. To make this happen, you need to limit your free product in order to encourage free product users to unlock the features provided in the paid product. Usually, the companies limit the features by offering paid upgrades, extra features and monthly limits.