Charging Nothing Pays Off With Freemiums

freemium model

The success of "Angry Birds," Skype and LinkedIn are proving that the buzz over "freemiums," in which companies give away a free version of a service, is justified. That’s because all those services employ a freemium model, under which customers receive the free service with the hope that they will then pay money for a premium version of that same service.

While giving away services for free may seem to be a risky move for businesses, recent data is proving otherwise. Mobile analytic firm Flurry found that freemium games generated more profit than paid games.  There is a simple reason for this success, according to Phil Libin, CEO of freemium note-taking and archiving software service Evernote.

[Many a Fortune Starts with Freebies]

"The easiest way to get 1 million people paying is to get 1 billion people playing," Libin said.

The basic idea of getting as many people as possible to use a service is a large part of the success of freemiums, but allowing people to get a free test drive before making a purchase is the biggest reason behind that success. Customers, however, are not willing to pay for just any old service. In particular, the infographic by Mavenlink found that customers are willing to pay for things such as unlimited services, support, add-ons and greater data storage after testing the free versions of products.  

Column Five Media designed this infographic for Mavenlink. The information was based on data from a variety of sources, including Reuters, TechCrunch, Forbes and FastCompany.

Reach BusinessNewsDaily staff writer David Mielach at Dmielach@techmedianetwork.com. Follow him on Twitter @D_M89.

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