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What Makes the Freemium Model Work? | Business Models
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Over the past decade “freemium”—a combination of “free” and “premium”—has become a common business model among smartphone app developers, Internet startups, and other Software as a Service business (SaaS). But how does giving away a service something for free work to a businesses benefit? In this video, you’ll learn how the freemium business model can be a viable strategy for explosive user growth along with challenges in executing freemium successfully.
Learning Objective 1: Describe the basic components of the freemium model.
Learning Objective 2: Understand the challenges associated with operating a freemium business model.
Learning Objective 3: Analyze the underlying economics of the freemium model.
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References:
https://www.sec.or.th/TH/Pages/Investors/EquityProductWarrants01.aspx
https://en.wikipedia.org/wiki/Warrant_(finance)
https://www.drwealth.com/5factorsaffectingthepriceofwarrants/
https://sias.org.sg/beginnersguide/keyfactorsthatdetermineawarrantprice/
https://www.set.or.th/th/regulations/simplified_regulations/warrant_issue_p1.html
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What is FREEMIUM? What does FREEMIUM mean? FREEMIUM meaning, definition \u0026 explanation
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What is FREEMIUM? What does FREEMIUM mean? FREEMIUM meaning, definition \u0026 explanation.
Freemium is a pricing strategy by which a product or service (typically a digital offering or application such as software, media, games or web services) is provided free of charge, but money (premium) is charged for proprietary features, functionality, or virtual goods. The word \”freemium\” is a portmanteau neologism that was coined by Jarid Lukin in 2006.
The business model called shareware has been in use for software (crippleware or freeware) since the 1980s, particularly in the form of a free time or featurelimited (\”lite\”) version, often given away on a floppy disk or CDROM, to promote a paidfor full version. The model is particularly suited to software as the cost of distribution is negligible, so little is lost by giving it away for free – as long as significant cannibalization is avoided.
The term freemium to describe this model appears to have been created only much later, in response to a 2006 blog post by venture capitalist Fred Wilson summarizing the model:
Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc., then offer premium priced value added services or an enhanced version of your service to your customer base.
Jarid Lukin of Alacra, one of Wilson’s portfolio companies, then suggested the term \”freemium\” for this model.
In 2009, Chris Anderson published the book Free, which examines the popularity of this business model. As well as for traditional software and services, it is now also often used by Web 2.0 and open source companies. In 2014, Eric Seufert published the book Freemium Economics, which attempts to deconstruct the economic principles of the freemium model and prescribe a framework for implementing them into software products.
The freemium model is closely related to tiered services. It has become a highly popular model, with notable examples including LinkedIn, Badoo, and in the form of a \”soft\” paywall, such as those employed by The New York Times and by Press+. A freemium model is sometimes used to build a consumer base when the marginal cost of producing extra units is low.
Cloud service providers – ranging from Infrastructure providers (IaaS), platform providers (PaaS) to software service providers (SaaS) – use freemium pattern in their business models. Companies such as Rackspace, Heroku, and Amazon use freemium business patterns by providing cloud services for free, but in limited and trial use. Amazon, for example, allows anyone to create a simple cloud in their infrastructure as a trial service for 12 months.
Other examples include freetoplay games – video games that can be downloaded without paying. Video game publishers of freetoplay games rely on other means to generate revenue – such as optional ingame items that can be purchased by players to enhance gameplay and/or aesthetics.
What is a Freemium Business Model?
This Animated Video answers the question What does freemium mean? and what is the revenue model for freemium. The actual word freemium is a mashup of the words \”free\” and \”premium\”. The video looks at the business models of Skype and spotify.
freemium speaklikeshaf business
Freemium: The First Business Model of the 21st Century
At the Revenue Bootcamp Conference in Mountain View, Calif., Chris Anderson, author of \”Free: The Future of a Radical Price,\” discusses how different companies use the freetopremium, or freemium model, to not only make money, but often keep customers at a higher rate than fullypaid services. There are many economiesones of status, time, information and moreand the trick is to get people to trade their money for one of them.
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