Why Do Companies Give Away Their Products for Free? The Secrets of the Freemium Model

Have you ever wondered why some companies offer their products or services for free? Today, more and more startups begin their journey by providing products without charge. But what happens next?

Many of today’s business giants started their operations using the freemium model, which involves offering basic services for free with an option for paid upgrades. Companies like Uber, Dropbox, BlaBlaCar, Skype, and many others have successfully adopted this strategy. Initially, they provide their services free of charge, although often with certain limitations.

For instance, Uber still offers promotional codes for first rides to attract new users. Dropbox allows users to have free accounts with limited cloud storage space. BlaBlaCar, a ride-sharing platform, was initially completely free but is now gradually introducing booking fees. Skype offers free calls, but additional services, such as calls to landlines, require payment.

The Goal? Attracting Users and Identifying Those Willing to Pay.

This strategy, known as freemium, has one primary goal – to attract as many users as possible and then convert some of them into paying customers. In many cases, it is the premium users who finance the free access provided to basic users. This model is commonly used not only by large online platforms but also in industries like education and training, where inexpensive introductory products often lead to the sale of more advanced and expensive services.

Benefits of the Freemium Model

The freemium model benefits both parties. Companies using it gain a wide user base, increasing their visibility and reach in the market. Customers, on the other hand, can try out services or products without incurring significant costs, which enhances their trust and willingness to make future purchases.

For entrepreneurs considering bringing products to market, it is crucial to determine which services or products can be offered for free or for a nominal fee. These should be products that attract as many people as possible, from whom premium users can be identified. Premium customers are often willing to pay more because they have already experienced the value of the products or services offered.

Building a Community as the Foundation of Success

In today’s dynamic business world, building a loyal user community is key to success. Therefore, if you are starting your entrepreneurial journey, remember to give something initially. A customer who benefits from a free offer and experiences the quality of your products is more likely to invest in your brand in the future.