Freemium Model
Quick definition
A pricing strategy where you offer a free basic version and make money by having users upgrade to premium features.
Detailed explanation
Freemium combines "free" and "premium": users get permanent free access to your product with limited functionality, and only pay for advanced features, more usage, or enterprise functionality. The difference with a trial: freemium doesn't expire. On average, 2-5% of freemium users upgrade to paid, but that 2-5% finances the 95%+ free users. Freemium works as an acquisition channel (millions of free users build brand awareness), as a qualification mechanism (heavy usage indicates buying intent), and as a viral mechanism. The art: the free version must be useful enough to keep using, but limited enough to trigger upgrades. Best practices: limit on usage (100 contacts free, then pay) or features (basic version, pro features locked).
Synonyms
Examples
HubSpot offers free CRM for unlimited users. You can track contacts and send emails, but marketing automation, workflows, and reporting are in paid tiers from €45/month. Of their 150,000+ freemium users, 8% pay - enough to build a billion-dollar company.
Canva gives free access to basic design templates and 5GB storage. Premium users (€12/month) get 100GB, brand templates, and background remover tool. 4% of their 100M users pay = €4.8M monthly.
When to use this?
Freemium fits SaaS products with low marginal costs (extra user costs nothing), large target market (need volume), and clear upgrade trigger (more users, more storage, better features). Not suitable for services with high delivery costs per customer.
Match-day approach
Match-day helps you determine if freemium fits your business model. We analyze your unit economics, calculate how many free users you need to be profitable, and design the upgrade triggers. We also build sales processes to proactively approach high-potential freemium users for enterprise deals.
Related terms
Product-Led Growth (PLG)(PLG)
A go-to-market strategy where your product itself is the primary driver for acquisition, conversion, and expansion - with minimal sales intervention.
Conversion Rate
The percentage of prospects that move from one stage to the next stage in your sales funnel.
Learn more
Wil je weten hoe je freemium model effectief inzet in jouw organisatie? Neem contact op met Match-day.
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