Freemium Pricing

The freemium pricing model is used to expedite customer adoption of the product.

Many companies use this as part of a tiered pricing model.

The freemium model gives users some experience with the product.

These are the advantages of a freemium model:

It’s easy to implement as the price is zero for a period of time or usage.

Customer usage shows the company which ones to pursue for upgrades and paid services.

Freemium models can generate virality.

There are disadvantages to the freemium model, as follows:

There is a cost to supporting free users including support and technical costs.

Customers often don’t value what they don’t pay for.

It can be difficult to move customers off the free service into the paid service.

To use the freemium model effectively you must have a set of features that customers will pay for.

If you give those compelling features away for free, then it will be hard to upsell them to paid customers.

 

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