What is Freemium
Free basic product with paid features
Freemium is a business model where the basic product is provided for free, while advanced features are available for a fee.
How It Works
- Free — basic functionality available to everyone
- Premium — paid advanced features
- Conversion — some free users upgrade to paid plans
Model Advantages
- Low barrier to entry for new users
- Viral growth through recommendations
- Ability to test the product before purchase
- Broad base for upselling
Freemium Examples
- Spotify — free with ads, Premium ad-free
- Dropbox — 2 GB free, more storage for a fee
- Slack — limited history, paid for full access
- Zoom — 40 minutes free, unlimited paid
Key Metrics
- Free → Paid conversion (typically 2-5%)
- CAC (customer acquisition cost)
- LTV (customer lifetime value)