Freemium. It is a pricing strategy that has been around since the 1980s, but what does it mean and how does it work?
The term is a blend of the words ‘free’ and ‘premium’ and is a tactic where something is offered free of charge to entice customers into paying for additional features or services in the future.
Organisations do this in the hope that users enjoy what they have received to such an extent that they are willing to pay a premium to access new features or use other services.
Read on as we take a closer look at some of the different ways that organisations can utilise a freemium business model to attract new customers.
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Bonus Offers & Promotions
The gambling industry has been quick to spot the opportunities in implementing a freemium pricing strategy to attract new customers.
Reputable operators offer promotions such as free slots no deposit to entice people into signing up for an account and playing games on their site.
They provide the opportunity to play selected slots for free and are an excellent way for players to familiarise themselves with the different games.
No deposit casino bonus offers have become hugely popular in recent times, with an increasing number of operators seeking to leverage this freemium strategy to their advantage.
Most of these types of deals have conditions attached to them, meaning that you are required to ‘play through’ the bonus a specified number of times before winnings are unlocked.
Any winnings you accumulate are saved as a pending balance in your casino account until you complete the wagering requirements.
Once you’ve completed the criteria, your winnings are transferred into your main balance, and you can use them as you see fit on the site.
The operators use this strategy in the hope that you will eventually make a real money deposit further down the line.
Free Trials
Many organisations offer free trials of their websites or apps to entice people into paying for a subscription in the future.
For instance, YouTube Premium provides ad-free access to content across the platform, making it a more attractive proposition than the basic service.
They offer customers a free, 30-day trial to demonstrate its value in the hope that people will be impressed enough to take out a subscription.
Many media outlets also use the freemium model as a way of attracting new customers into subscribing to their websites or apps.
In some cases, they will provide unrestricted access for a specified period, with the user required to take out a subscription to continue to view after that.
Alternatively, they may offer access to a limited amount of basic content on an ongoing basis, with the more substantial items hidden behind a paywall.
Services such as Skype, LinkedIn and MailChimp also use the freemium strategy to great effect to attract new customers to their respective platforms.
Website & Social Audits
Digital marketing agencies regularly use a freemium model designed to highlight the benefits of taking advantage of their services.
Many companies in this sector offer a ‘no-obligation’ initial audit of the website and marketing activities of a potential client.
Various elements can be audited included digital marketing, search engine optimisation, Google analytics, social media, website content & design and sales.
The agency will use their expertise to conduct a thorough analysis of a firm’s digital output, before providing a report which will include recommendations for practical improvements.
This will show the client how they can improve online performance to deliver a better return on investment and help achieve enhanced commercial results.
Providing expert guidance for free is an excellent lead generation tool, as it allows the agency to demonstrate their skills to a captive audience.
It offers the potential client quantifiable value as opposed to the agency merely asking for their time to talk about its services.
Undertaking an audit allows an agency to gain a better understanding of the client’s marketing activities to show how it can help that firm resolve any issues.
Free audits are an excellent conversation starter but have the bonus of allowing an agency an easy way to introduce additional chargeable services in the future.
Social Gaming Apps
Social gaming apps have become hugely popular over the past few years and are a perfect example of the freemium pricing model in action.
They generally feature virtual currencies that players can use to make progress through the different levels in the game.
A player will be handed free currency at the start of the game and can boost their coin balance by completing set tasks or simply by signing in each day.
For instance, the Pirate Kings app game gives players a starting balance which they can add to by spinning a wheel containing different rewards.
They can use this cash to build an island and, once completed, they move on to the next level and start the process again.
The cost of the elements needed to build the island increases as the game progresses, meaning that players may decide to use real money to purchase more virtual currency.
The freemium model works particularly well in this instance, as it taps into the competitive nature that most people possess.
Developers Jelly Button have enjoyed great success with the strategy, with more than 70 million people playing Pirate Kings since it was first launched.
Freemium in Business – The Final Word
With business increasingly being conducted digitally, organisations have been forced to rethink how they market their goods and services.
Freemium pricing is undoubtedly a strategy that works, providing firms with a cost-effective way to attract new customers.
It is a viable and sustainable tactic and has the power to be extremely profitable if implemented in the correct way.
The adoption of the Freemium model in websites, apps, products and services is snowballing, and this trend will continue for the foreseeable future.
