Rather than bragging about how insanely great its VoIP products are, Skype makes its users insanely productive by letting them talk with any other user worldwide for free. The company makes money by charging users for connecting to phone systems outside of its network. It's a freemium model: Attract users with free services, then charge them a premium for special features.—Bruce Sterling, "Blogging for Dollars," Wired, June 1, 2006The Freemium concept, whose name was suggested by Jarid Lukin of the Flatiron portfolio company Alacra. appoints a model of monetization in which the basic service is free and the advanced services are paying. But nothing is totally free in this world. Companies which apply this model, offer customers a basic service allowing them to live the necessary experience, to have their opinion about the product or service. Some enterprises also offer all the services but for limited period.
The Freemium model is based on the experiment of the frustration of the purchaser. They create some frustration when the trying user will arrive on the verge of the available features or of the trial period. Thus, by proposing the satisfaction within just a click, companies have strong chances to convert the non paying user in a customer.
Examples of businesses using this model:
- Softwares (with trial versions).
-Meetic : You suscribe for free but have to pay to see complete profiles.
-Second Life;
The Freemium model is based on the experiment of the frustration of the purchaser. They create some frustration when the trying user will arrive on the verge of the available features or of the trial period. Thus, by proposing the satisfaction within just a click, companies have strong chances to convert the non paying user in a customer.
Examples of businesses using this model:
- Softwares (with trial versions).
-Meetic : You suscribe for free but have to pay to see complete profiles.
-Second Life;
-Skype.
Advantages:
- This model is a very interesting mean to make its service known to prospects.
- Attractive for web native services to grow fast.
- It a way to get fast purchases online.
Disadvantages:
-It can appear as a trap for some consumers, knowing that sellers play on the clients’ feeling of frustration. They sometimes realize some fast-taken purchases online. But nobody is ever forced to click, no?
-Sometimes customers don’t understand why they’ll have to pay for a service that they got used to have for free, and it can be harder to convert free consumers to paying consumers.
-E-business companies using this model have to find the just balance between the features offered in the free version and the paying offer. Indeed, the supplier has to be totally satisfied to envisage paying.
Sources: http://en.wikipedia.org/wiki/Freemium_business_model
Advantages:
- This model is a very interesting mean to make its service known to prospects.
- Attractive for web native services to grow fast.
- It a way to get fast purchases online.
Disadvantages:
-It can appear as a trap for some consumers, knowing that sellers play on the clients’ feeling of frustration. They sometimes realize some fast-taken purchases online. But nobody is ever forced to click, no?
-Sometimes customers don’t understand why they’ll have to pay for a service that they got used to have for free, and it can be harder to convert free consumers to paying consumers.
-E-business companies using this model have to find the just balance between the features offered in the free version and the paying offer. Indeed, the supplier has to be totally satisfied to envisage paying.
Sources: http://en.wikipedia.org/wiki/Freemium_business_model
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It can appear as a trap for
some consumers, knowing that
sellers play on the clients’
feeling of frustration. They
sometimes realize some fast-taken
purchases online. But nobody is ever
forced to click, no?
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