The Freemium Business Model - A Road Less Traveled.

Freemium is a business model which works by offering basic goods and/or services for free, while charging a premium for advanced or special features. The word freemium is created by combining the concepts free and premium.

The Freemium model has been around for a while, but seems to be coming into its own in the environment of Web 2.0.  The Freemium model in its pure form provides a base set of services free of charge in order to keep the traffic flow going but then charges a fee for specialized services.  The freemium model typically supports its free offering with advertising of some sort which then is used as an added incentive to step up and pay for a premium product or a subscription-based version of the service.

It is in essence the inversion of the free sample. Rather than giving away one percent of your muffins to sell 99 percent, you're giving away 90 percent of your goods for free to sell 10 percent. Your give away is intended to reach the largest possible audience. Freemium is something similar to certain video games, where you can play as much as you want up to level 10, and only in certain areas. If you want to access the rest of the game, you have to pay.

Freemium is all about creating a traffic flow. If you can get a flow of visitors to your site, you can usually find a way to monetize. Free content is appealing and attracts people to your site. This is important as it typically takes several visits to a site before someone buys a product.

Also free is great if you are not established as an authority, and want people to get to know you more. Business relationships are all about trust and perceived value.

The downside to the freemium model comes in predicting the balance between the free and the fee. If the free product is comprehensive enough, the client may see no need to upgrade to the paid product. If the free product falls short, the trust is broken and the client will not trust the upgrade to meet his or her expectations.

In today's ever-changing marketplace businesses struggle to stand out from the crowd. Freemium can set you apart and boost your market share.