Often when companies decide to launch their new product or service they study the usage behavior of their customers. This can be possible with a business model called freemium.
What is freemium?
The term freemium comes from the combination of the words “free” and “premium”. This is a business model in which a company offers basic or limited features for free to users, encouraging them to upgrade to a paid premium version. With the free option, users can only access a limited number of features or might have usage limits. However, the premium version comes with advanced features that offer customers for better experience.
Through this pricing strategy, businesses have the opportunity to convert their free customers into paid customers and create opportunities for future transactions. There is another method to attract and convert new customers. And it shouldn’t be confused with freemium. This type of strategy is called a free trial.
What is a free trial?
A free trial allows users to access a free (limited) version of your product or service, but only for a specific period. This period can most often be a 7-day, 14-day, or 30-day trial, but it can also last longer. This gives the users a chance to experience the full value of the service before committing to a purchase.
What are the differences between free trial and freemium?
The difference between free trial and freemium is that free trial is not a pricing strategy.
Free trial is a customer acquisition strategy. This type of strategy needs to attract users, keep them until they are ready to buy, and then convert them into customers.
Pricing strategy on the other hand is when a company sets a price that assumes will attract customers to earn a profit. This strategy can help the company get on the market and stand out from its competitors. Companies that use freemium pricing such as MailChimp provide free services with limited features and options, and if users want the extra features then they have to pay for them.
