Marketing Dictionary
Freemium
Definition
A pricing strategy by which a product or service is provided free of charge, but money is charged for proprietary features, functionality, or virtual goods.
Deep Dive
Freemium is a popular pricing strategy, particularly prevalent in the software-as-a-service (SaaS) industry, where a product or service is offered with a basic set of features free of charge, while advanced or premium functionalities, enhanced support, or virtual goods are sold at a cost. The term itself is a portmanteau of "free" and "premium," embodying the model's core principle of providing significant value upfront without financial commitment, aiming to attract a large user base and demonstrate the product's utility.
Examples & Use Cases
- 1Spotify offering free music streaming with ads and limited skips, alongside a paid ad-free premium subscription with offline listening
- 2LinkedIn providing free basic networking features while charging for advanced features like InMail and detailed analytics
- 3Zoom's free tier allowing 40-minute meetings, with paid plans offering longer durations and more participants.
Related Terms
SaaSSubscription ModelUpselling