Freemium - A business model could save you from traditional marketing tactics

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. Tinder has also launched Tinder Gold, which has its own unique features.

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.

There are several points to keep in mind before launching your startup following this model. First of all, you have to give much thought to your product.

• It should have a long-term usage.
• It should motivate users to convert into paid users.
• You should provide an onboard service to demonstrate how your users can best utilize your product.
• As the free product does not claim any charges, start with nominal charges for upgrades and premium add-ons.
• Your product should have repeated payments to keep your users engaged with recurrent payments.

This way the freemium business model Top 19 Business Models That Will Hail the Startups works effectively with the ‘free ideology’ and engaged users that attract more users. It works on the zero price point paradox. On the other hand, customers don’t value things they get for free. Therefore to make your product valuable, don’t unleash all the features in the free product. Give limited features and exciting offers to enhance your model.

After reading about ‘How Does Freemium Business Model Work?’ and ‘What Is the Freemium Revenue Model?’ Do you want to start your own freemium business? You are at the right place. We at Ncrypted can help you bring your ideas to life. You can get started with our YouTube or Mailchimp clone. Also, if you want to add personalized charm to your website, we provide customizations as well. Get in touch with us to know more and our team of well-trained technologists will guide you towards success.

Analysis of The Freemium Business Model

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