AYMEN-MBA 2

THE FREEMIUM BUSINESS MODEL

“Freemium” the new business model

The freemium is a revolutionary business model concept. The association of the words and concepts “free” and “premium” gave birth to the freemium concept which has expanded thanks to the Web 2.0 world. The idea consists in giving away free versions of a product than providing premium versions and add-ons in order to attract some users who could be upgraded to payable premium versions.

Text links to info source:

http://onstartups.com/

http://en.wikipedia.org

http://www.contentmatters.info/content_matters/

- Online businesses utilizing “freemium” business model:

http://flickr.com/

http://www.skype.com/intl/fr/

* Advantages of “freemium” concept:
- Provides services for free and is very useful
- It encourage customers to use the product and test it before paying
- It helps developing social networks

* Disadvantages of “freemium” concept:
- It mostly relies on word to mouth
- It can not ensure high revenues
- The premium services could be less interesting than those provided for free, depending on the consumer’s behaviour

posted by Aymen @ 4:52 PM