Definition of Freemium Pricing
This pricing strategy lets users have primitive services for free. However, they have to purchase the services or features that are considered premium. It’s a combination of the word “free” and “premium”.
Description of Freemium Pricing
It’s often used by businesses that are just going out into the market. They use it to gain the attention of shoppers to take interest in their product or service and then hopefully they like the item enough to purchase additions on it. For example, Skype offers you their simple features for free, such as making online calls to one person, but you have to purchase their more complex packages such as making a group call.
Advantages of Freemium Pricing
This is a great way to get users to try out what you have to offer. As a result, you gain the attention of a larger group of people. For instance, Skype caters to both business people and those who just use the platform to connect with their loved ones.
Disadvantages of Freemium Pricing
There is no guarantee that a person who uses your platform for free will ever end up purchasing a better version of it. They may either just be satisfied with all that the free version offers, or they aren’t even happy with the free version, so they move onto a competitor.