This document discusses the freemium business model, where core products are offered for free while premium products and features are paid. It provides examples like Skype and LinkedIn that offer basic free services but make money through optional upgrades. The document outlines how freemium differs from traditional paid models and when freemium works best, such as when a quality free product can be duplicated digitally at low cost to reach a large audience. Premium upgrades are then sold to support the free offerings and generate revenue.

1. Freemium

2. Outline
• Definition
• Traditional vs. Freemium Business Models
• Examples of Freemium vs Non Fremmium
Products
• Applicability of the Model

3. • Freemium – business model in which core
products are given free and premium products
are sold

4. Traditional Business Model
Activities,
Target
Resources,
segment
Partners Premium
value
proposition Revenue
Cost Structure
Stream

5. Freemium Business Model
Activities, Resources,
Target Segment
Partners
Free Value
Proposition
Cost Structure
Activities, Resources,
Target segment
Partners
Premium value proposition
Cost Structure Revenue Stream

6. Examples of Freemium
• Skype
• LinkedIn
• Apps in Iphones

7. Not Examples of Freemium
• Not advertising
• Not “Gillette”

8. • Skype
– 18.2 B call minutes
– 2.2 B call minutes were paid for by consumers
– As of 3rd quarter 2008, USD45M profit

9. When is Freemium Applicable?
• Quality free product that people want
• The free product can be duplicated digitally (at
very very minimal cost)
• Large reach

10. Reference
• www.freemium.org