How does a Freemium business model work?

Over the past decade “freemium” — a combination of “free” and “premium” — has become the dominant business model among internet start-ups and smartphone app developers. Users get basic features at no cost and can access richer functionality for a subscription fee.

It’s hard to resist the allure of free. One key reason user adoption of the Internet has soared globally is the rise of the “freemium” business model — where users get to use a basic product or service for free, but must pay for a premium version with additional features. When done right, the freemium business model can help drive massive traffic to companies’ websites, offer a “try before you buy” experience that overcomes user resistance to paying, and convert free users to paying customers.

• Making Freemium Work — HBR
• How Companies Can Get The Most Out Of A Freemium Business Model — HBR
• Freemium — BM Tool Box

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