How to build a trusting model of relationships with consumers so that they become your loyal support base? There are many recipes for creating and retaining a customer base. One of the most common in the digital environment is the freemium model. Find out why it is beneficial to both consumers and businesses. 

How Did the Freemium Model Arise?

The popularity of the freemium business model is due to its effectiveness in attracting customers. It arose back in the late 1980s in opposition to the traditional proprietary business model in the software market. Subsequently, it spread to other sectors of the economy due to its simplicity and effectiveness.

Difference Between the Proprietary Business Model and the Freemium Model

• The proprietary model assumes that the consumer must pay for all services or products of the company. The service is provided only after payment has been made, unless other conditions are agreed upon, such as installments, deferred payment, etc.
• The freemium model divides services or products into basic, which are offered for free, and premium, for which the company charges a fee.

How to Deal with the Challenges of the Freemium Model?

When launching a business based on the freemium model, you may encounter a situation where you have collected a sufficient number of clients for the free version of the service, but there are not many willing to pay for premium services. In this case, you can make several decisions:

• Review your pricing policy. Perhaps the prices you set for using your services are higher than on the market. At the first stage of company promotion, it is better to make them lower than those of competitors, so that your clients feel the benefits of using your services.
• Take out a loan to cover priority expenses to wait for the moment when users begin to convert into consumers of paid services. If you run a small business, you can take out payday loans at Payday Depot by comparing conditions from different lenders. If you have a medium or large business, it is better to take out special loans for running a business, which provide certain benefits for entrepreneurs.
• Strengthen your advertising campaign by expanding the boundaries of your target audience. Thanks to this, you will be able to reach those users who are not aware of alternative companies in this niche. In this case, you will benefit from being the first to offer them such a service.

What Are the Benefits of the Freemium Model for Business?

The freemium model very quickly solves its main task — attracting a large number of users who will try your service.

• You get the opportunity to study and analyze the usage behavior of your subscribers. Subsequently, based on this data, you can adjust the marketing strategy, upgrade the website, offer additional features, etc.
• You can use additional monetization models for your business, such as the advertising-based model or affiliate model. By advertising third-party products on your free subscription platform, you will earn additional income. Also, by posting blog articles with reference links, you can make money from affiliate marketing.
• With a large number of subscribers and requests for your website, its ranking will increase. This means your company website will move to the top of search results.
• The freemium model promotes brand awareness and causes positive reviews on the Internet. Using a free service as a basis for building your reputation, you will subsequently receive dividends from this in the form of trust from new users.

Consumers also benefit from this model since they can get acquainted with the features of different services for free. They can compare similar services from different providers and make informed choices. But you must remember that for users to switch to a paid subscription, the difference between the paid and free versions of the services must be significant. By correctly finding this critical point, your freemium model will act effectively, smoothly leading subscribers to the idea of ​​upgrading to the premium version of the platform.