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Wednesday, March 9, 2011

Business Model - Freemium Model

Continuing in our discussion on business models, Direct Sales being the last one; today we deal with one of the most common model we see in the software world - It is what we called Freemium.

The term "freemium" is a collation of two words - free and premium. This name beautifully summarizes what this model is all about. Simply it is says make something free and as the customer asks for more features and modifications charge a premium for it.

One of the glaring examples for this is the anti-virus software that we find today. Most anti-virus are offered for free for a specified period of time say 45 days, and on completion the user would need to purchase it. Another variant of the freemium is to give a basic version of the software with limited essential features, and the additional features would be enabled on paying for the license.

This business model would work best when you are trying give the prospective customer a chance a feel of your product. This is a showcase to the customer and sometime also helps not just get the sale but in early phases of release can be used for reviewing the features etc. In some cases this also shows the confidence the developing company has in its product!

Use this technique to win your customer’s appreciation based on your product's strength.

Read in Kannada: http://somanagement.blogspot.com/2011/03/blog-post_09.html

1 comment:

  1. Good work.Very informative.I just like this blog very much.

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