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What is freemium?

Definition: Freemium is a business model and pricing strategy based on giving the target audience the basic features of your product for free while providing premium features for a fee.

The freemium model is effective because the company benefits from “free” users ( recommendations, feedback, large user base) and generates revenue from the target audience buying the premium version.

Benefits and limitations of the freemium business model


  1. Attracting a user base

One of the most successful ways of attracting new customers is by allowing them to see and test the tool themselves. By providing unlimited access to the core features of your product, you’ll attract a wider user base, many of which will be your ideal customers.

  1. Economic marketing

Freemium models are a cost-effective way to market a new product on the market. By offering the basic features for free, satisfied users will leave reviews  and recommend the product, leading to more customers.

  1. Customer feedback

A fast and effective way to get feedback on your product is to let your target audience test it and share their thoughts. Giving your audience something they need for free will prompt them to “return” the favor with good feedback.


  1. Balancing between free and paid

In a freemium model, it may be difficult to distinguish the “ free” from the “ premium.” By offering a lot in your basic version, you may have a hard time converting freemium users into premium buyers, which won’t generate sales.

  1. Increasing churn rate and unqualified leads

Another setback for a “ free version” is that it will bring a lot of users who are there just because it’s free, and they won’t buy a premium model.

Examples of freemium businesses

The 10 popular examples of freemium businesses are:

  • Spotify
  • Slack
  • Asana
  • Youtube
  • Clash of clans video game
  • Canva
  • Dropbox
  • Evernote
  • Grammarly
  • Mindmesh
  1. Mindmesh

Mindmesh is virtual desk software that helps teams and individuals organize and prioritize their tasks efficiently. The software has a freemium model, you can choose between a  free “ core” model with basic features and a “ scale” premium model with additional benefits.

  1. Grammarly

Grammarly is an online writing assistant that helps individuals by providing grammar, spelling, and punctuation suggestions. It operates with a freemium model, which means you get the basic suggestions for free, and premium features are paid.

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Article FAQs

Is a free trial freemium?
A free trial can be considered a type of freemium, but the two have different limitations. A free trial gives you access to premium features within a limited time period, while a freemium offers the basic features for an unlimited time. Both serve as marketing bate to convince the customers to upgrade and pay.
Does freemium increase churn and the number of unqualified leads?
Yes, freemium models can increase churn and the number of unqualified leads because there is a chance the company won’t attract its target audience but individuals who want to try something for free. However, these downsides can be reduced with a targeted marketing strategy and precise product descriptions.
Are freemium models profitable?
A freemium model can be profitable if a small percentage of users are monetized. The arguments in favor are low costs for customer acquisition and long-term customer value.
Is freemium sustainable?
Yes, a freemium model is sustainable. The arguments in favor are a large user base, upsell potential, customer retention, and economical marketing.

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