As Wikipedia<\/a> 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.\u00a0 Sounds familiar?\u00a0 Yes, a ton of web services operate under this freemium model.<\/p>\n In fact, most software-as-a-service offerings offer 3 or more pricing options.\u00a0 The introductory option is free, while the 2nd and 3rd ‘premium’ options are offered for a fee, because they include additional value-added features.\u00a0 Or, the introductory option is free for a trial period, then the fee kicks in.\u00a0 In fact, BacklinksGenie<\/a> uses this freemium pricing strategy.<\/p>\n There are many advantages to this type of pricing, mostly due to reasons driven by consumer psychology.<\/p>\n Also, though not discussed in the article, there is psychological principle behind offering 3 versions of products and services.\u00a0 When presented with 3 options, consumers typically choose the middle option.\u00a0 They don’t want the cheapest product available, not feel they need the most expensive, highest grade one.<\/p>\n Intel takes advantage of this consumer behavior.\u00a0 They have taken the same exact processor hardware and released 3 versions of it, priced at 3 distinct prices and marketed in a “good, better, best” manner.\u00a0 Consumers feel inclined to get the mid-level processor and pay the premium for it, even though, in actuality, the hardware is identical to that of the lowest-level processor.<\/p>\n![\"\"](\"http:\/\/5.mshcdn.com\/wp-content\/uploads\/2009\/07\/freemium.jpg\" "\\"freemium")
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