Does the “Freemium” model fit your business?

Increasingly, the digital world leads companies to abandon traditional marketing strategies to rely on product-led growth, this marketing approach aims to boost brand visibility by presenting a high-quality product free of charge to a large number of users.

João Amador
Oct 26 2021 • 2 min reading
Does the “Freemium” model fit your business?

The freemium business model falls into the product-led growth category and continues to increase in popularity among companies.

What is the freemium model?

Freemium combines the words “free” and “premium” to describe a particular type of business model. This unique practice for acquiring customers is especially popular with software companies, companies with internet business flow, and gaming companies (eg Spotify, Linkedin, Dropbox, etc...).

It's an acquisition model that brings users to a new software product and, if used correctly, encourages frequent users to upgrade to premium versions.

How does a freemium template work?

The basic premise of the freemium model means that a company offers a product, usually software, with basic features at no cost, however, this product has limitations that, in some cases, make the user want more from the service.

In addition to the free version of the product, there is a premium version, with more features, services, and benefits available if the customer pays a subscription fee.

This model aims to build a foundation of trust between the customer and the company, while at the same time demonstrating the value of the product offered.

Users have the opportunity to experience the product in its most basic form for as long as they need to understand its value, and it is expected that the limitations of the free product will drive users to pay for the premium version.

How do you know if a freemium model works for your business?

The decision to implement a freemium model depends on your company's specific goals. If you started recently with the hope of gaining brand awareness or gaining new customers, a freemium model may be viable.

Typically high-quality products that attract a wide customer base while at the same time being low cost are perfect candidates for a freemium model. Just as services that people use consistently, whether for work, entertainment, or creative hobbies, they also perform well.

On the other hand, if your primary goal is to generate revenue and increase conversion rates, other business models can help you achieve that goal.

Developing the right marketing strategy and business model can revolutionize your company.

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