How technology is taking advantage of freemium services

What is freemium?

The term “freemium” comes from a combination of the words “free” and “premium.” It refers to a business model that includes providing consumers with both complimentary and extra-cost services. A company offers easy and introductory services for free to users to try out; it also charges a fee for more specialized services or extra functionality. Jarid Lukin of Alacra, a provider of corporate knowledge and workflow software, is credited with coining the word freemium in 2006. The method, on the other hand, dates back to the 1980s. A freemium model is one in which a company provides a service to a customer at no expense in order to lay the groundwork for future purchases. Companies create relationships with consumers by providing free essential services, then charging them for advanced services, add-ons, increased storage or use restrictions, or an ad-free user experience. For Internet-based businesses with low customer acquisition costs but high lifetime value, the freemium model works well. The freemium business model allows users to try out basic features of apps, games, or services for free before paying for upgrades to the essential bundle. It’s a common strategy used by new businesses to entice consumers to use their software or service.

Who provides a freemium service?

Many companies use this business model nowadays; however, we will look at a few and explain why they have worked so well for these particular companies.

Dropbox – Dropbox has nailed the balance and is a shining illustration of what a freemium service should be. The free version is very popular and meets the needs of the vast majority of users. Anyone who wants more can choose from a number of clearly specified incremental upgrades.

Spotify – The platform that resurrected a music industry plagued by declining physical sales and stagnant downloads and is widely credited with cracking the freemium model. Despite recent criticism that their free edition is too limited (too many commercials, insufficient song selection), they could have 100 million paying subscribers by the beginning of 2020. These are some remarkable figures.

WordPress – Free blogging program that allows you to quickly and easily build your own website. This platform made everything that used to be prohibitively expensive available to the general public. According to Toni Schneider, CEO of WordPress, “we just charge for the items that are extremely difficult to do.” Customers are expected to think, “This is difficult, this is costly, and I’m willing to pay for it.”

Candy Crush – Without a doubt, this is one of the most popular freemium games. In gaming, an excellent freemium model entails paying for premium features. Candy Crush has perfected the contentious in-app purchasing definition. The integration of Facebook has been crucial in enabling a game to become a topic of discussion, comparison, and competition among friends.

Casino Games – Many online casinos now offer a freemium service, even from day one. You can sign up to an online casino and straight away can be rewarded with free spins on a free online slot game. This gives players a chance to try before they buy, so to speak, and test certain games before committing to spending any money. They also have a chance of winning money too, so it is a very enticing offer. Players are also often given free spins for signing into their accounts regularly or by depositing money. This keeps the players coming back and, therefore, high player retention.

One Drive – If DropBox isn’t your thing, OneDrive is a great alternative that gives users five gigs of storage space to save whatever they want. OneDrive is particularly useful if you use Microsoft’s 360 tools because it automatically syncs all of your documents to the cloud.

Skype – With Skype’s free plan, you can chat one-on-one with anyone in the world via instant messaging or video. This is an easy to use, dependable choice for maintaining a face-to-face relationship for a company that involves travel or foreign clients, but voice calls to landlines can cost money.

People always want something for nothing.

If there’s one thing I’ve learned in life, it’s that people would do anything for a freebie. On the other hand, freebies aren’t just fun for the customer; they’re also marketing gold for the company. Any piece of swag you hand out increases the likelihood that the recipient will remember your brand and tell their buddies about it the next time they put on that shirt or take out that pen. The freemium business model’s magic is its potential to expand a company at breakneck speed through advocacy. Users get firsthand experience with the importance of the product and vigorously spread the word.


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