Why Freemium Might Be the Right Business Model for Your Product

Why Freemium Might Be the Right Business Model for Your Product

Freemium is a business model (internet based) in which the basic business services are provided free. Freemium is equal to free usage for long life, but the charges impose on the additional features. The strategy of freemium is based on shareware where you can access to free services (limited) the way you want.

In this blog, we will work to find out why freemium might be the right business model for your product.

How does Freemium model works?

This model was bought into existence in 1980’s as just a time-limited strategy, simply known as shareware strategy. In this strategy, a product is provided to the users to use it free and even can upgrade it.

The Freemium model takes advantage on zero points a paradox that’s mean to maximise the user participation; the user point cannot be a beat.

Moreover, we know that people don’t value those things which they get free. So, they should pay something to value the product. This thinking rise to the feature of freemium services and that is micropayments.

Network effect

No doubt that distributing free product increases the number of users and mostly these users don’t want to go for premium. In the Freemium business model, these users act as a magnet for the prospective premium customers.

Advantages of Freemium Business Model

1) Easy customers

However, no doubt that one of the best strategies to gain more users is to offer products for free. This is the best way to earn money. Just like YouTube that offers its services free, but for video monetization , it runs its ads.

2) Increased Brand Equity

No doubt if the user loves your product (free), this will increase its worth. And when the worth increases, your brand quality also increases.

3) Better than premium

Freemium is best as compare to premium because no user wants to pay upfront for those services that he has not experienced yet. Furthermore, if Freemium business model is used for viral services, it can help you to generate more revenue.

The choice is yours. You need to test the strategies for their better understanding of business.

Related Posts