Freemium is a term used to describe a business model whereby corporations offer their service or physical product platform for free, with the opportunity to upgrade to a greater level of capability at a steep cost.
This strategy succeeds because buyers are drawn to the free product, familiarize themselves with it, and then become resistant to switch to a competing product.
Businesses that employ the freemium pricing model provide a basic product without charge and an improved version with more features, services, or content in exchange for a price. Due to a dearth of features, the enhanced version can also be regarded as premium.
Best for items having broad consumer appeal and a logical transition from "free" to "premium." Freemium conversion rates typically range from 2 to 5%, thus a business needs a sizable user base and a strong conversion plan.
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