Going Freemium: Will It Scale The Heights Of Your Business Revenue?

Since past ten years, the combination of the word “free” and “premium” has become one of the most dominant business models among enthusiastic tech-startups and entrepreneurs. Users get access to the basic features at no cost and can access richer functionalities for a subscription fee. If you’ve ever networked over LinkedIn, share files via Dropbox, searched mate using Tinder or watched TV shows using Hotstar then you have experienced the model first hand. Though there are several revenue models available to monetize your app still, Freemium is one of the most approached models by majority B2B companies and enterprises. Let’s look at Freemium model closely and try to find out what makes it tick.

What Exactly Is The Freemium Model?

In the freemium model, the app is available to the users for free with certain premium features gated and the user needs to subscribe app in order to unlock the remaining app functionality. Here, basic app functionality is free while there are certain charges for premium and proprietary features. (image content)

The basic idea behind the freemium model is to keep users engaged and enticed enough so that maximum users opt to enroll themselves for the premium experience by paying more to the publishers. Many enterprise applications have chosen to implement the freemium model and have experienced sustainable revenue stream.

Though the freemium model is being backed by the concept of premium epitome, why it works? Why is it being adopted by majority business and enterprise?

Scroll down a little to get all your answers.

Why Does Freemium Model Work?

Freemium works because of free works. Users are attached to the service and slowly they get familiar with the app at their own pace. If they like your application features and services, they spread your application services and details over their network. This is how free word of mouth publicity is entertained for the new entrant in the town. This will not only attract more user’s time and attention but will also create a buzz for your app in the market and gradually increases user-base of your application.

Image - Why freemium model is highly appreciated by customers?

1. No cost: People love the concept of “free availability”.

2. Allow Testing: Free service allow users to test and become familiar with unknown products.

3. It's Perfect: It falls under “Perfect Category” for those that are satisfied with basic features.

4. Simple: It’s quite easy for people to kick-start app usage with easy to go tutorials.

Though this disruptive model works best with products and services having low marginal cost before beginning, below are some questions that a startup, business or enterprise must look out before you adopt the freemium model.

Going Freemium- Evaluate These Questions!


1. What Should Be Free?

Let’s say you have created a social media application just like PICSCII that allows you to share event based photos with your friends, family, and attendees. Your product has 15 features and you have given 5 features for free for anyone that registers and login inside the application. So, how do you know whether you have made the right choice or not? If you suspect that you haven’t, what you should do in that case?

One of the main purpose of freemium to entice more users towards your app. If you are not succeeding with that goal, it means your offerings are not that compelling to attract large flocks and you need to provide scalable features for free. If you notice that your app is generating a good amount of traffic but only a few people are enrolling for premium version then it’s time to cut back on the free features as they are too rich that hinders users to drive towards premium version.

2. Does Customer Understand The Importance Of Premium App?

If customers do not clearly understand what they would gain by upgrading an application to the premium version, you will monetize only fewer of them.

One of the most famous brands named Dropbox has been successful in making conversions. The former version was able to grasp the attention of 200 million users with a simple proposition: The one who enters username & password will get two-gigabytes of cloud storage for free. If people run out of space, they can enroll premium version by paying $99/year for 100GB of storage.

Here, the free version is ideal and most suitable for the one that just wants to store their important documents and presentation. But anyone who wants to have a backup of their media (photos & videos) quickly hit the limit and are bound to upgrade their free version to the premium one.

3. Are You Committed To Bring Innovations In Your Products?

You should not continue using freemium merely as a customer acquisition tool. In order to make your applications and services thrive in the market, it’s your duty to bring some of the other kind updates in your free and paid version of the app. If you have gained a significant number of users in the free version, and you stop paying attention to them, you will lose gained an advantage.

For Instance: Ravio, the publisher of angry birds kept its users glued by offering various new updates and free new versions. Now users pay for the premium version features that mobile app developers regularly update the app. Constant updates and innovations in the applications keep the user engaged.

Other than this still, there are some important points to be evaluated which will help you to define clear outcomes of the model.

1. Does your service have viral adoption path?

2. Does your service have a huge potential market?

3. Does your app have the strength to monetize free subscribers?

4. Do you have a clear and compelling migrating path for your users?

Freemium – A Smashing Hit for Big Labeled Companies

Being one of the most approached Monetization models, Freemium act as a driving force behind many app development companies in value creation.
officeDrop, Dropbox, Evernote, Skype, Basecamp

So, Is It The Right Time To Invest In Freemium Monetization Model?

You can start your app development backed by freemium monetization model right away. But are you facing trouble with a shortage of development resources? If yes, then no Worries! Brainvire is the solution for you. Hire mobile app developers from Brainvire in a quite cost-effective price model. Just drop us your requirements and contact us now to discuss more.

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