The Freemium business model consists of offering a series of basic services free of charge but charging for other complimentary services. In fact, the name comes from joining the English words “Free” (free) and “Premium” (paid). That is to say, you can use the app or the web page without paying anything but if you want to take advantage of all its potential you will have to pay.

This is an example of a successful business model for several reasons and in this article, we review their keys.

Even so, it is not the only one that can bring you money, so before applying it to your website it is important that you consider all your options. To do this we recommend that you take a look at the other 5 business models for Marketplace that exist. If you still trust that the Freemium is the one that best suits your web or app, it is mandatory that you keep reading.

How to make money with Freemium

Although Freemium’s definition does not seem to give rise to any doubts, it can be qualified and broadened. There are many types of complementary services that must be paid for:

  • For services. It is usually the most common. The free functionalities are limited and the paid ones are more advanced. This is the case, for example, with Spotify.
  • By time or number of times, it is used. The free service has restrictions when making use of the app or website as many times as you want. Paying can be used as much as you want.
  • By advertisements. A very typical one is to remove ads from the platform if you pay for it. If not, you have to swallow them all.
  • For storage capacity. Some programs that consist of storing files can make you pay for increasing their capacity.
  • For passing screens of a game. You can play for free but if you get stuck somewhere and need help, you can buy it.

It is very common for these Freemium services to mix and match and platforms to earn money with more than one at a time.

Keys to success of the Freemium business model

For a Freemium business model to succeed is vital:

  • That the free part is VERY attractive. If you don’t get hooked with the basic platform, you won’t pay for an upgrade.
  • The volume of users has to be large enough for an acceptable income to be achieved. Among the whole community, there are usually few who pay for the Freemium service.
  • Identify to what extent Premium services are good compliments to Free and vice versa.
  • Find the most appropriate price for the Premium service, as Internet users are quite reluctant to pay even a penny.

Freemium in a Marketplace

For a Marketplace, the Freemium service can be an interesting option but you have to know how to incorporate it. For example, sellers can be helped to get rid of their things, buyers can be allowed to make lists or facilitate searches, and so on.

However, you should never negotiate with the option of offering a totally secure payment method to users. As we have always explained to you, to gain the trust of buyers and sellers there is nothing more important than to guarantee that their money is secure. For this, you have escrow, a method that is based on the fact that the buyer does not pay directly to the seller but that the money is paid into a separate account.

When the buyer receives the product correctly, that money is transferred to the seller, never before. If you have a Marketplace or are thinking of creating one and are interested in learning more about escrow and how to incorporate it, contact Marketpay without any commitment.

Feel free to contact us if you need help.

Find your business motivation!

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