Freemium model

Learn the definition and meaning of Freemium model along with an example

Freemium model
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Definition

Offering a product in a free and paid version is known as the "freemium" business model. It’s maintained free to use, in order for more people to test out the product. Going forward, users can choose a subscription plan if they need to access more features.

How is it useful?

A free plan is included for product adoption. It helps the brand to get exposure. If the free & paid plans are designed correctly, then once the user has formed the habit of using the product, it’s unlikely that they’ll switch to other options. And soon when they want to experience the advanced features, a user will convert into a paying customer.

Example

Canva is a free-to-use design platform. However, it offers premium features like removing background & collaboration with other users only to its paying users. Its free version attracts users & introduces them to the platform. Since the users are then familiar with the functionality, later when some percentage of them want to use advanced features, they come back to Canva.