What is a freemium business model and how does it work? On the App Store, you can find both free and paid applications

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You have probably used or are using free applications. Today, they are easy to find. You will only need a simple download to start using them. However, some of them will ask you for a fee if you want to access more features or special functions. These types of applications are “freemium” apps. Now, you may be wondering what are the characteristics of these apps and if they are really worth using.

Due to digital transformation and increasingly demanding consumers, companies need to find new and different business models to deliver a satisfying customer experience. And one effective way to do this is through a freemium service. “Freemium” comes from the combination of the words “free” and “premium”.

The concept was born in 2006 with the aim of creating a broader customer base with the free service and gradually showing them the functionalities they could acquire by subscribing to the paid packages. Note: this business model only works well for those services that are superb. In other words, not for all. Only then, users might want to pay for it.

And what if you really liked the service, and you paid for it? The most logical thing to do would be to use it. Otherwise, what would be the point of paying for it? This way, the company ensures that you will use its products or services. Clever, isn’t it? It is also an excellent way to build customer loyalty! Users usually end up falling in love with the services and paying for the full version. Once again: To make this work, the service has to be attractive.

Spotify is an example of a successful company working under this type of business model. This European brand not only has many paying customers, who bring in the company’s highest revenues by paying for exclusive services, but also has a higher level of audience than other companies in the sector. And, the latter is thanks to its free service.

Many companies, today, are rethinking their business models and considering freemium service into their offering. And this is not only good news for them. If you think about it, not only companies benefit from this business model, but also all the users themselves.

Having the possibility to use a service, without paying for it, helps you to become familiar with it, and to test it before purchasing it. This is why even companies such as VSO use this business model. Many of their best live casinos offer free games. These allow you to familiarize yourself with the look and feel of live dealer games, without risking your hard-earn cash. This site offers you the chance to play live casino games for free, reward you for being a loyal player, and allows you to try out new casinos with no risk.

Now, you should know that there are services that seem to be freemium, but in reality, they are not. This is usually the case with services that offer a free trial period. Although the objective of both is the same, that is, that the user gets to know the product or service better, they are two different business models. What is the difference? Freemium services do not limit the amount of time a user can access the product or service. That is right. Regardless of whether you pay or not for the service, you will enjoy it for as long as you wish.

But what if all users choose the free version? While this is an extreme scenario, it could happen. To address this situation, companies use another marketing strategy within this business model: ads as a way to generate revenue. Therefore, in the free version, you will find many advertisements. Ads are another source of income for companies.

It is true that ads are annoying for users, but they are commonly related to what you like. So, you could also find something you are looking for. However, if you prefer an ad-free experience, you can always pay for the premium service. You will see it really worth paying for it. Of course, this only applies to excellent services.

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