Freemium
E-commerce
E-commerce
Freemium combines an ongoing free basic version with paid extras. Explore how it differs from a free trial and what to watch out for.
Freemium combines free and premium: you use the basics for free, without a fixed end date. You pay for extra features, more capacity or additional capabilities. Payment does not have to be a subscription; a one-off upgrade is also possible.
A free trial is different. Access expires or you need to pay after an agreed period. With freemium, the basic version remains free for as long as the provider offers it.
For example, a design tool might let you create simple designs for free while charging for advanced collaboration or additional export options. The free version needs to be useful; the paid version needs to offer clear additional value.
Measure more than free account sign-ups: track active use, upgrades to paid, retention and the cost of support and usage. Lots of free users do not automatically mean a healthy business model.
Tip
Do not restrict the free version so much that you cannot experience its value. Do account for the cost of free usage: upgrades need to generate more than it costs to serve both free and paying users.
Related terms
- MRR and ARRMRR is your recurring monthly subscription revenue, ARR is the same revenue annualised. One-off projects don't count.
- ChurnChurn is the share of customers or subscribers leaving within a period. It's the counterpart of retention.
- Pricing strategyYour pricing strategy is how you set prices: based on cost, on the market, or on the value the customer perceives.