What is a freemium business model and how does it work?


You have probably used or are using free apps. Today they are easy to find. You will only need a simple download to start using them. However, some of them will charge you a fee if you want to access more features or special functions. These types of applications are “freemium” applications. Now you might be wondering what the features of these apps are and if they are really worth using.

Due to digital transformation and increasingly demanding consumers, companies must find new and different business models to deliver a satisfying customer experience. And an effective way to achieve this is to use a freemium service. “Freemium” comes from the combination of the words “free” and “premium”.

The concept was born in 2006 with the aim of creating a larger clientele with the free service and gradually showing them the features they could acquire by subscribing to the paid plans. Note: This business model only works well for services that are superb. In other words, not for everyone. Only then might users want to pay for it.

What if you really liked the service and paid for it? The most logical thing to do would be to use it. Otherwise, why pay? In this way, the company ensures that you will use its products or services. Clever, isn’t it? It’s also a great way to build customer loyalty! Users usually end up falling in love with the services and paying for the full version. Again: for this to work, the service must be attractive.

Spotify is an example of a successful company working under this type of business model. This European brand not only has many paying customers, who bring in the highest revenue from the company by paying for exclusive services, but also has a higher audience level than other companies in the industry. And, the latter is thanks to its free service.

Today, many companies are rethinking their business models and considering freemium service in their offering. And it’s not just good news for them. If you think about it, not only companies benefit from this business model, but also all users themselves.

Being able to use a service, without paying for it, helps you to familiarize yourself with it, and to test it before buying it. This is why even companies such as VSO use this business model. Many of their top live casinos offer free games. These allow you to familiarize yourself with the look of live dealer games, without risking your hard-earned cash. This site gives you the chance to play live casino games for free, rewards you for your loyalty, and lets you try out new casinos risk-free.

Now you should know that there are some services that seem to be freemium, but in reality they are not. This is usually the case with services that offer a free trial period. Although the goal of both is the same, i.e. to get the user to know the product or service better, they are two different business models. What is the difference? Freemium Services do not limit the length of time a user can access the product or service. It’s true. Whether or not you pay for the service, you will enjoy it for as long as you want.

But what if all users choose the free version? Although this is an extreme scenario, it could happen. To remedy this situation, companies use another marketing strategy within this business model: advertisements as a means of generating revenue. Therefore, in the free version, you will find lots of advertisements. Advertisements are another source of revenue for businesses.

It is true that ads are annoying for users, but they are usually related to what you like. So you might also find something you are looking for. However, if you prefer an ad-free experience, you can always pay for the premium service. You will see that it is definitely worth paying for it. Of course, this only applies to excellent services.


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