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Give Your Customers Cake While You Eat, Too: The Freemium Business Model

Did you know that people who receive something for free will talk about it 20 percent more than people who pay?

Have you ever considered making free services a part of your business model?

Initially, it might seem like a mistake to give things away for free? Isn’t that like throwing money down the drain? Not necessarily.

There are a lot of benefits that come with utilizing a freemium business model. Read on to learn more about what this is, why it works, and how you can make it work for you.

What is the Freemium Business Model?

The freemium business model combines the words “free” and “premium” and is used to describe a business that offers both free services and paid premium services.

It’s important to note that a freemium business is different from a business that offers a free sample of a particular service before making customers pay. Offering a one-week or one-month free trial before requiring payment is a viable business strategy. It’s just not the freemium business model.

Freemium businesses offer customers a simple and basic service for free. It also offers a higher-end, premium service with additional features — customers have to pay to get access to these additional features.

Examples of Freemium Done Right

Many software companies utilize the freemium business model. Gaming companies use it on a regular basis as well.

The following are some well-known businesses that have mastered the freemium model:


This is a freemium tool that is great for businesses trying to improve their search engine optimization and avoid penalties


MailChimp is an email marketing software company that makes it easy for users to put together an email list and automate their email marketing strategy.


This is an invoicing software geared to independent contractors and small business owners.


DropBox provides users with 2GB of free storage and simple file sharing options; it also offers a paid plan with additional storage and more advanced sharing options.


This is a popular social media management tool that allows you to schedule posts and plan content ahead of time.

Benefits of Giving Things Away

Are you starting to feel a little intrigued by the freemium model? Are you wondering whether or not it’ll benefit you?

If you’re still on the fence about the freemium model, you might want to consider some of these great benefits:

  • Creates new opportunities to upsell customers and maximize returns
  • Lowers barrier to entry and increases audience size
  • Gain additional revenue from advertising

The freemium business model also allows for lots of opportunities for free beta testing. You can test various features, referral programs, and different upgrade options without having to spend a lot of money.

How to Make Freemium Work for You

Are you interested in giving freemium a try? If so, it’s important to make sure you’re doing it in the right way.

Many people who have a negative attitude toward the freemium model feel that way because they have made mistakes when trying to implement it in the past.

Listed below are some tips to follow that will help you ensure you’re doing freemium the right way:

Plan Your Products Carefully

In order to run a successful freemium business, you need to start by offering great products. Think carefully about what you’re going to offer and how you’re going to draw customers in.

Ideally, your offering will be able to be used long-term and will motivate free users to convert to paid users. You should also have an onboarding service available that will help users get the most out of your product.

Start with Small Charges

When you’re first getting started, it’s best to keep the charges for premium upgrades as low as possible. That way, people will be more inclined to pay for the upgrade, especially if they think the features are worth it.

Remember, too, that you should set up recurring payments for your customers. This helps to keep them engaged and reduces the number of cancellations you’ll deal with in the future.

Make Your Users Happy

No matter what type of business model you’re using, you need to make sure your users are satisfied with their product.

This includes both the free version and the paid version. After all, if they’re frustrated with the free version of your product, what makes you think they’ll pay more money for the upgraded version?

Listen to customer feedback and treat criticism as an opportunity to improve. It’s not fun to receive, but it’s valuable information that can help you make your business better.

Put Together a Great Platform

Another way to make sure your customers are happy is to make sure your platform and website are easy to use.

You may want to hire a custom web development professional to help you put together a site that your customers will love to visit.

If you’re going to offer an app as part of your business, work with a professional app developer, too.

Test and Retest

Make sure you’re testing and retesting your product on a regular basis. You should always be looking for ways to improve and figure out what your users like and don’t like.

Once you figure out what is getting people to convert from the free version of your product to the paid version, you can optimize your business strategy and see significant increases in revenue.

Get More Business Tips Today

As you can see, there are tons of benefits that come with using a freemium business model.

If you keep these tips in mind, you’ll be able to see maximum returns, too.

Do you want to learn more about other ways to run your business more effectively? Do you want to be a better business owner and increase your earnings?

If so, we’ve got lots of articles on our site that can help you do a better job of running your business.

Start by checking out this article on the best small business accounting software programs you might want to start using.

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