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Strategic Planning and Management Insights

Freemium, a Model Explained

[fa icon="calendar"] October 31 / by Anthony Taylor

How do people make money with an app or program that they give away for free?

There are a few reasons someone might give away their product for free to get people to use it. The most common ones are: advertisements, in-app sales, or up selling to the paid version of their product.

Generally, the paying customers support the activities of offering the product for free.

What is a freemium? It's a basic version (for free) of an app or program available at no cost. If you like it and make a purchase you can access the paid (premium) features. 

Well-known programs that that have a freemium model include Slack, Skype, and Spotify (among others). 

Freemium is great way to reduce the risk for your customer and to ease them into a sale. By trying the product for free, it answers objections that a potential customer might have, allowing them to determine the features that they may or may not need.

By using the freemium model for applications or services, recovering the cost of making the app can be covered by converting the free customers (or advertisements and in-app sales!) 


Technology companies can benefit immensely from strategic planning.
If you're in need of resources, check out our complete strategic planning starter kit: 


Topics: Marketing, Business strategy, Pricing strategy

Anthony Taylor

Written by Anthony Taylor

Anthony Taylor is thought leader on strategy and leadership. He's a published author on the subject of entrepreneurship and strategy, Anthony can be found doing keynotes in both French and English. You can connect with him on Twitter @anthonyctaylor and have him work with your team on your strategy and organizational development.

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