Freemium is a business model where a product or service is provided free of charge, but money (a premium) is charged for additional features, services, or virtual (online) or physical (offline) goods.
The Logic
- Lower Barrier to Entry: Removes the risk for new users to try the product.
- Viral Growth: Free users can become advocates and spread the word.
- Value Demonstration: Users experience the value before they pay.
The Value-First Connection
Freemium is the ultimate Value-First pricing strategy. It says, “We are so confident in our value that we will give you a significant portion of it for free.”
The Trap
The danger is treating free users as “freeloaders” rather than as a marketing channel and future pipeline.
- Support: Must be scalable (community, self-service).
- Conversion: Must be based on natural need for more value, not artificial crippling of the free product.
When done right, Freemium aligns the business’s success with the user’s success.