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How to Implement Freemium Strategy and its Benefits 15 December 2021

What is a Freemium Strategy


Whether to give a freemium version or not to customers has always been a bothersome decision for any organization. Freemium versions have their own advantages and disadvantages, but the answer lies in the organization’s vision and the product. But before that, it is essential to understand what is a Freemium Strategy, the advantages and disadvantages of a freemium strategy, and also the differences between a freemium strategy and free trial. 


What is a Freemium Strategy?

A  business strategy where organizations offer services for free, but these services are  limited and basic in nature, is called the freemium strategy. The idea behind this strategy is to entice potential customers to buy by giving them a sneak peek of what to expect. 


To put it in a simple way, a freemium strategy entails marketing a premium version of a product, which includes all the features and services, through a free version of a product, which includes only a limited number of features open to the user. To understand better, here is a list of features with real-life examples that are usually limited in free versions – 



Everyone prefers to store their files and data in one place. So when a user is trying the free version of your product, and it runs out of space, he or she won’t have any other option other than to upgrade and buy your premium version. A real-life example of storage limitations is done by Gmail – for months, people use it for free, and once they are accustomed to its storage, it prompts users to upgrade their user profile to store more  by paying a minimal amount. 



In a free version, limit the number of users that access the platform/use the product. This can differ for different genres of products; for example, Linkedin allows everyone to connect with unlimited users. However, it restricts users when they want to search for people or jobs, citing that their freemium pack allows one to use only so much, for anything more, they need to pay . So technically, after the first 20 or 30 users/jobs, people have to upgrade into their premium version to access.


Muvi Billing


Showing Ads

Showing ads in freemium versions works best for every industry, be it OTT, music, or gaming. The most popular example of this will be Youtube and Spotify. For non-paying users, watching ads between songs won’t be a big issue, but for music lovers, it is, which is why the conversion rate from freemium to premium is much higher on Youtube and Spotify. 


Also read : Why are multiple gateways important for an automated billing system?


Time Constraints

Allow a user to use your product for a limited time in a day. Once they become addicted to your product, they will definitely want to upgrade their version to a premium one. Example – Candy crush. We all are guilty of being addicted to this game at one point in time. The catch here was to wait until a certain hour in order to get a life to play. 


Advantages and Disadvantages of a Freemium Model

The Freemium model works best to attract initial users to use the product as it is free and also drives traffic to the landing pages as well as the website. It acts as a promotional tool for the product and gives the sales team a list of potential customers. Moreover, in a freemium model, an organization can also earn from its free users by  showing ads in between, which has always been a win-win situation for both ends. 


However, the disadvantage of a freemium model is that the conversion rate of free users to paid users is less. If the users get comfortable with a product, even with limitations, they will never turn into paid users and will continue to enjoy all the available benefits. Also, sometimes it is hard to decide which features to offer free and which ones to restrict as premium. In this confusion, sometimes organizations tend to open a lot of features that only drive the users away from being a paid user. 


Advantages and Disadvantages of a Freemium Model


Difference between Free Trial and Freemium Model

A free trial means that a user can avail all the features of a product for a certain period of time, whereas in a freemium model, users can avail part of the product for free forever, but with features limitations. Both these strategies come with their pros and cons. For example, free trials for products require more marketing than freemium models. However, when it comes to conversions, free trials lead, as it offers a complete hands-on experience of the product. Also, freemium models can be used by B2B and B2C organizations, whereas free trial models are limited to B2B organizations. 



A freemium model can work best with organizations that understand the basics of enticing a customer through basic features. Always include 50 percent of your features in the free version, and keep the best ones for the premium users. You can also do a mix of free trial and freemium; that is, you can give a 15 day free trial of your product for free, which will consist of all the features. Once the 15 days are over, you can continue to offer minimal features to the users. This way, the user will know the best of both worlds and will definitely choose the premium version. 


Do you know that if you are planning to implement a Freemium strategy for your platform, the first and foremost thing you need to take care of is the payment gateway. A billing software that can handle partial payments, recurring payments, add credit cards and not charge unless opted for etc. Hence, even before going for the strategy, a software like Muvi Billing should be considered. Muvi Billing is a plug and play software that empowers your payments with any business strategy you opt for, without any hassle. 


Opting for the Freemium strategy ourselves, the Muvi Billing software is actually available for a FREE 14 Day Trial. Opt for the offer now, and experience the strategy in play yourself! Not to mention a free trial of the software can help you gain an understanding of the strategy and how well you can implement it to reap benefits! 


Billing system

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Kritika Verma is an Associate Content Writer and works with Muvi Marketing Team. She is an inbound marketing professional and ensures high-quality traffic on the Muvi website through her blogs, articles, and more. She has an engineering background but always had a knack for writing. In her free time, she is either on Quora or on (Mostly losing).

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