Pricing Tips
Pricing Tips

Tip 18: Freemium Models

Freemium models have proven to be an effective strategy for attracting early adopters and increasing revenue opportunities through upselling and cross-selling.

In this episode, our experts delve into the benefits of offering a "lite" version of your product or service, exploring how it can entice early adopters and seamlessly integrate users into your ecosystem. Learn the best practices for designing and implementing a successful freemium model, maximizing the potential for customer conversion and long-term growth. With practical tips and real-life examples, this episode will help you unlock the full potential of freemium models and set your business on the path to success.

Welcome to 20 days of pricing tips—part 18. I’m Alexa a member of the pricing team and I’ve worked on over 36 pricing projects. Today we're talking Freemium models.

Have you heard of "Freemium"? It's one of our favorites. "Freemium" is a combination of free + premium, and it represents one of our core strategic recommendations when it comes to pricing optimization.

Let's start by talking about what it means, and we'll dig into 3 reasons why you should consider it. A "freemium" product or service can be offered for free but ramps up to include premium features that cost money. The "free" part here is fundamental to why this model is so successful. By giving a "lite" version of your product/service away, you can 1) entice early adopters and 2) get users into your ecosystem and on the path to upsell or cross-sell.

At its core, freemium is a marketing and customer acquisition strategy. If you can accept that your Freemium strategy might show losses in its early days, you should know that it can pay dividends in the long-run as you win over some of your early adopters as remunerative, valuable customers for life, with lower CAC to boot.

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