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Strategic Planning and Management Insights

Freemium, a Model Explained

[fa icon="calendar'] October 31 / by Anthony Taylor posted in Marketing, Business strategy, Pricing strategy

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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.

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Double Up Promotion from Starbucks

[fa icon="calendar'] August 17 / by Anthony Taylor posted in Marketing, Business strategy, Pricing strategy, Business news

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Are you one of those people that need a coffee to get you going? Sometimes you even need a second coffee in the middle of the day just to get through the day? Apparently there are a lot of us out there, and Starbucks knows it. When I went to get my morning coffee the other day, they told me that with my receipt I could come back after 2:00pm to get an iced coffee for just two dollars. I thought this was an awesome promotion for a few reasons:

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The Potential Pitfalls of Discount Pricing

[fa icon="calendar'] July 21 / by Anthony Taylor posted in Pricing strategy, Business strategy, Business news

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In an episode of the office (if you don't watch the Office, you should!) Michael and his new company, The Michael Scott Paper Company, realized that despite gaining many new customers from their main competitor by discounting their product, this business model was not viable long-term. Their key value proposition was being the cheapest paper in town, cheaper than other big retailers. Although they thought this would work on a fixed cost structure, they were operating with a variable cost structure, which meant that as their company grew and incurred additional expenses, their profit margins would be stretched and not sustain their growth.

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