I bet all of you will agree with me when I say that people generally like the word free. When an evening concert has free admission, more attendees will turn up that night. When an art exhibit offers free entrance or viewing, even people who are new to art will not hesitate to go. After all, something “free” has no consequences – well, most times, that is.
With that said, the motive behind a freemium business model is no rocket science. This business model has been growing in popularity for the past decade, especially with digital services and products. If you are here to find out whether offering a freemium version of your product will help you profit in the long run, be sure to read till the end. Better yet, you can follow and subscribe to my YouTube channel, Annette Fergs TV, where I talk a lot about making online businesses more profitable so that CEOs or owners can take home more money to their respective families.
Anyway, let’s get right down to business.
Why Are Freemium Product Versions So Successful?
As I had already mentioned a while ago, one major factor that contributes to the success of freemium products and services is the instinctive inclination of people to take advantage of anything “free.” Because let’s be real, nothing feels better than benefiting from something that did not cost you money.
This same mentality is what makes sales and discount promos successful. Even when people don’t specifically need those discounted items, they will buy or try it to satisfy their need for a good bargain. Generally speaking, it simply feels good to get something at a lower price or better yet, free of charge.
Another factor is the availability of options. If you’re managing an e-commerce business or offering digital products and services, I’m sure that you’ve already experienced how congested online markets are. Since there are practically thousands of other options in the World Wide Web, thousands of businesses just like yours, people are hesitant to make a buying decision right away. They are likely to ask themselves questions, like:
Am I buying the right product or service?
What if “that” company offers something better than “this” company?
How do I know this is a good buy?
And so on, so forth. Because people are literally given countless of options, they become more reluctant to spend money right away. Now, what happens when a particular company offers a freemium version of its products and services? They assure people that they won’t be charged a cent for using the freemium version they offer; not a single cent.
The chances are that people will flock to this company that offers a freemium version. The reason is also very simple: If they don’t like how it works or it does not serve the purpose they intend to use it for, they can just cancel anytime – free of charge. This is how freemium products and services successfully reel in leads for their paid products. They give people the satisfaction to try something at no cost, with no consequences, while also earning the opportunity to show the same people how much more convenient things can get if they upgrade to a paid version.
Are Freemium & Trial Versions The Same Thing?
The short answer is no. Under a Trial Business Model, users are given total access to whatever products or services the company has to offer. There are no limits to what they can do or how much they can do. They practically get a “free pass” to use the full version of the product for a certain period of time. Trial versions often last for two weeks to a month, which gives users enough time to assess whether the product or service is something that they’re comfortable with using.
On the other hand, a Freemium Business Model does not have a specific time frame of use. It does not end after two weeks or a month. Basically, what you offer people is a downgraded or a limited version of the full product. This means that they can keep using a particular service under the freemium version if that is what they prefer. An example would be the Strava subscription changes.
Now, you must be thinking that offering Freemium versions of your products and services is a risky move.
I cannot negate that – there are definitely risks to this type of business model. However, there are also ways to lessen the odds of those risks.
Is There A Risk To Offering Freemium?
Let me just start this off by saying that every business model in existence has some risks or flaws involved. There is no such thing as a foolproof strategy – just strategies with well-calculated risks.
As for the Freemium Business Model, one major risk is that people might never go for the upgraded version. They may like your product – like it so much that they practically use it every day – but they are also already satisfied with just the freemium version. The freemium already provides them with what they need, so there is technically no reason to upgrade or pay for the full version of the product or service.
When more people settle with the freemium version rather than upgrade to paid products and services, then your Freemium Business Model has failed you. However, let me just point out that most times, the problem does not lie in the business model itself but in the way you executed it.
This is why there is a need for expert opinion and guidance during the planning and development of freemium product versions. Done right, you do not only get valuable user feedback from people who’ve tried the freemium version of your services, but you can also encourage them to go for an upgrade.
The Freemium Business Model is an effective way to reel in potential buyers without having to spend as much time generating leads and tapping them one by one. This model is ideal for startup businesses that are offering something fresh and unfamiliar to the market. Making a free version of the product or service available for users will help you disseminate information about your brand faster and easier.
If you want to know whether freemium will work for your business type, you can get in touch with Annette & Co. for a FREE consultation. Don’t forget to give us a follow and subscribe to our social media channels for daily business updates!