Have you ever used a free software or app and got hit by a pop-up telling you to sign up for a premium account to get rid of ads or unlock more features? You were witnessing a freemium business model in action! Freemium gives you a sample of what is in store to encourage you to drop your money and unlock the entire experience.
What is Freemium?
A freemium business runs by offering limited services or features to users for free and then charging a fee for the use of additional services or features. The software industry has been using this pricing model since the 1980s.
Freemium has proven itself as a business model capable of bringing in a lot of success. Popular music streaming services like Spotify and Pandora offer free base accounts where the user can listen to playlists, radio stations, and the like that mixes ads in with songs. They are unable to select specific songs and hear them immediately. These streaming services drop the annoying ads in their premium modes and allow users free-reign over their listening experience.
Other examples of freemium can be found in video games where players are enticed to buy more in-game currency or items to advance their play quicker, get special items, among other reasons. Some notable freemium games include Candy Crush Saga, Fortnite, Clash of Clans, and MapleStory. Some of these games introduce a hard paywall where certain levels or quests are unreachable unless you pay. Other games allow everyone to play for as long as they like but put timers, rare items, and more in to encourage players to spend their money to keep the fun going.