The Hidden Benefits of the Freemium Model

Freemium business models typically offer hidden benefits that may go unnoticed at first.

Churn rates for freemium business models, for example, are often much lower than their paid counterparts. Why is this? Chris Anderson, author of “Free: The Future of a Radical Price,” explains that customers can better understand how a product fits into its operation on trial basis at first — so when they start paying the premium, they understand exactly what they’re paying for.

Freemium models are also ahead of the curve in terms of being suited to the demands of modern business. Whether its news, apps or something else, there’s a strong chance that whatever you’re selling already exists in a totally free incarnation. Thus, when it comes to competition, a paid model will often be the odd one out.

For more on how the freemium model works, watch the video featuring Anderson.