Freemium, a combination of “free” and “premium” has become the dominant business model among internet start-ups and smartphone app developers. (Kumar 2014). This is your 2021 update of the popular Freemium is popular business model:
Is your service an engaging pathway?
Upgrading is natural when users are entangled in your service. HubSpot CRM is free up to 1000 contacts and their US$ 663 share price proves users upgrade. Not-for-profit GHGSat connects free users to a community. Then upgrades users to donors and buys satellites.
Can you fund mostly free and few paid?
Do you have low marginal costs with minimal overheads for your large free user base. Users will still expect technical support, bug fixes, fast servers and confidentiality. Zoom suffered all of these complaints to become the 7th most popular 2021 Apple Store Freemium download .
Freemium Hero: Zoom
Can you earn revenue from free subscribers
A large user base is no burden if you can monetise ads, data, referrals or community donations. The most popular Apple Store download in 2021 was TikTok.
Freemium Hero: TikTok
Does your service appeal to a large market?
If your free-to-paid conversion rate is low you need many free users to win those few paying members. Our heroes plugged in to 2021 mega trends of short videos and the environment.
Freemium Heroes: Snapchat, Environment Defense Fund
Do your services become more sticky and valuable with use?
Some services increase in value with repetition. Spotify users expand their music collection service when favourite tunes become overplayed. This is widespread behaviour and we know because of the amazing 45% ratio of paid versus ad-supported users.
Freemium Hero: Spotify
Do your core services offer enough value to create Word of Mouth referrals?
If customers must pay for a complete experience then your offer is crippled not free. Delights in the free functionality drive your free advertising. The 'free for non-commercial use' tag is used by many including small low budget players.
Freemium Hero: PDFill PDF Editor
Are you fair?
Fortnight Battle Royal is an 'Anyone can win' game and launched competing against free pay-to-win games. Even when the service is free fairness is valuable to users. The subtly of these evolving online ethics created US$ 29 billion in value. Fortnights upgrade pathway is the 'perception of exclusivity' according to Fortnight CEO Tim Sweeney.
Freemium Hero: Fortnight
Can you add simplicity to distinguish your premium offer?
Dropbox simply markets their offer as '2 GB free' and this introduces 53 benefits across 5 pricing tiers. Branding value with simplicity can be difficult. Even Facebook could not market a paid version of WhatsApp and has announced WhatsApp Business is now free.
Freemium Hero: Dropbox
Are you up to date with Freemium in your target market
This article highlights the evolving nature of this exciting business model. Your challenge is beating your competitors' 2021 Freemium offer. You can assist everyone by contribution an opinion below about Freemium.
Hi Brian, I really liked reading your blog post on the freemium model. I have personally started using tools like Mail Chimp, HubSpot for my social media strategy to build my product MVP. What they offer is value, try our product first and they pay for it. Much like the AfterPay quote "Buy Now Pay Later". Sustainability is something I am passionate about, in your opinion which model is the best for a sustainable social media strategy for a brand such as their CSR etc?
Hi Brian! I love how succinctly you put together a checklist on how to excel using the freemium model. Interestingly, there has been a wave of mainstream social media websites modifying their freemium models to move away from placing advertisements on the platform which is seen as intrusive. Such as Twitter which is testing a subscription-based scheme called “Super Follows” to help users monetise their content and only those who pay/subscribe can gain access to subscriber-only content. It’s currently being trialled in the US and Canada but there are plans to make it international - https://www.businesstoday.in/technology/launch/story/twitters-super-follows-feature-to-help-creators-monetise-content-305732-2021-09-02
Also, there have been new types of freemium models popping up such as Yubo. It is live-streaming app that is completely ad-free and depends…
Hi Brian,
I liked reading your blog about how Freemium is an up and coming business model and what businesses need to consider and ask themselves before entering this space.
I liked your point on adding simplicity to the Freemium model and helping customers distinguish between what's free and what they would gain from the features that are not free. An interesting comparison is between Dropbox and LinkedIn. Dropbox makes it crystal clear for customers that they would get two gigabytes of cloud-based storage free, and would need to pay if they needed more. It's quite simple and has increased Dropbox's users to 200 million.
LinkedIn, on the other hand, doesn't make it quite clear on what customers would gain…