According to www.freemium.org, “The term freemium is coined using two powerful words – ‘Free’ and ‘Premium’. It describes a business model where you give away a core product for free and then generate revenue by selling premium products to a small percentage of free users.” For example, say you accept an offer from HBO for free service for 2 months, and then they charge you for a premium program – that’s a freemium. And the return address labels that you get in the mail for organizations and charities wanting a donation – that is also a freemium. So what are the benefits of this kind of marketing?
Freemiums may draw consumers to you who might not otherwise try your product. Offers of freemiums can be very attractive to a potential customer, and a way to coax them to try your services is with the offer of a freemium. In the case of the address labels, the freemium introduces you to the organization and you get to know something about them and what they stand for. Also, some people feel obliged to donate to these charities because of the freemium.
Those who try freemiums, often get addicted to the service and want to upgrade and get more. Once you have HBO free for 2 months, you may discover that you cannot live without the extra channels, or there is a particular program you have become accustomed to watching all the time. Chances are you will upgrade your service to include HBO. The freemium has done its job.
Word of mouth encourages marketing. If you decide to buy a premium product after using a freemium, and you enjoy the service, you will be more than likely to recommend it to a friend or family member. Word of mouth is probably the best advertising a company can have as it is done by people who have tried and tested the service – and liked it. Once again, the freemium works.
Freemiums are a clever marketing and advertising tool, and more and more companies and organizations are using them. They entice a potential consumer or donor with free merchandise or service and then get you to upgrade or make that donation. So, if you want to increase your revenue, you might want to try freemiums. They really do the job.