Freemium is a business model used by many companies to acquire new customers at no cost. Companies offering freemium services typically provide basic or limited features to consumers for free, while charge a premium or subscription fee for enhanced or advanced features. Over time, the freemium business model has become increasingly popular among app creators and other internet-based businesses.

First popularized in the 1980s, the freemium model has a number of advantages. By offering basic features for free, businesses can acquire a larger number of customers who can try out the product or service before purchasing a subscription or premium package. Moreover, since there’s no cost associated with downloading the software or giving the product a try, businesses can benefit from a larger user base and benefit from word-of-mouth advertising from those satisfied customers.

For the freemium model to actually work, however, companies must ensure that their premium users truly are getting more for their money. Companies need to provide additional, upgraded features, and improved customer service to their premium customers, ultimately increasing their loyalty and retention rate. This can include customization packages, increased storage, access to exclusive content, or priority customer service.

Overall, the freemium business model can be a great way to acquire customers, retain loyal users, and ultimately increase revenue. By providing basic to limited features at no cost, businesses can incentivize customers to try out the product or service, and then ultimately convert them into premium users. The success of this model largely depends on the additional features and customer service that’s provided to premium customers. By focusing on this special set of customers, businesses can ensure the sustainability of their business model.