I came across this great article on TechCrunch earlier this week on the freemium business model. This article discusses the business model, psychology behind, and critical aspects you should consider when you determine your own product pricing strategy.
First, the basic question. What is the term freemium mean?
As Wikipedia so articulately put it, freemium is a business model that works by offering a product or service free of charge, while charging a premium for advanced features, functionality, or related products and services. Sounds familiar? Yes, a ton of web services operate under this freemium model.
In fact, most software-as-a-service offerings offer 3 or more pricing options. The introductory option is free, while the 2nd and 3rd ‘premium’ options are offered for a fee, because they include additional value-added features. Or, the introductory option is free for a trial period, then the fee kicks in. In fact, BacklinksGenie uses this freemium pricing strategy. [...]