The freemium pricing strategy provides basic services for free to attract a large audience, then charges for premium features. It allows customers to try before they buy with low risk. If customers like the product, they will purchase premium features. However, competition is intense and customer wants constantly change, making pricing decisions challenging. Brand equity can also fade quickly. Examples provided offer free basic services but charge for offline access, ad removal, unlimited skips, higher quality, and more storage or advanced features. The model may not work for niche products that customers are not willing to pay for or companies unable to continuously offer incentives.

1. Freemium Pricing Strategy
Alexis McDonald
Marketing

2. What is it?
• “Free plus premium”
• The strategy is to provide basic services but
charges if you want more features added
• It is designed to attract a large audience
through the enticement of “free” so they will
come to see your product and message.

3. Why it is desired?
• No upfront costs or contracts
• Try it before you buy it (low risk)
• If you like it, you will buy it (addicted).
• The concept of time-saving
• Status (better and faster)

4. “Free”-dom cost
Competition is steep.
Pricing decisions will always be challenging.
Anticipation of what to offer free and what to charge will be
determined by what the audience wants—which changes
constantly.
Shifting customer relationship as target audiences mature.
Brand equity is fleeting.

5. Spotify
Listen offline
Music available on any device
No ads
Unlimited skip songs in your playlist
Playlist not on shuffle (if desired)
Better quality sound

6. Quiz RPG: World of Mystic Wiz
Purchase gold to buy crystals
Purchase crystals to buy cards with better
“powers”
Purchase gold coins for mega-invocations (move
skill levels on cards)

7. Barracuda Networks
More network storage space
Spam firewall
Instant replacement
Message archiver
Web filter

8. Amazon
Free two-day shipping
Streaming of movies and tv shows
Free books through lending library
Unlimited free access to music without ads

9. Who should not use this model?
• Products/services which are not what
consumers are willing to pay for
• Small businesses with niche
• Companies unable to offer permanent
incentives

10. References
Amazon Prime. (15 Aug 2014). Retrieved from http://www.amazon.com/gp/prime/signup/videos?ext=884-
3252&ref=pd_sl_7j18redljs_e&tag=amazusnavi-
20&hvpos=1t1&hvexid=&hvnetw=g&hvrand=17936516361535896976&hvpone=&hvptwo=&hvqmt=e&hvdev=c
Barracuda Purchase. (15 Aug 2014). Retrieved from https://www.barracuda.com/purchase/index
Brustein, J. (11 Jul 2013). How Freemium Products Use Our Brains Against Us. Bloomberg Businessweek. Retrieved from
http://www.businessweek.com/articles/2013-07-11/how-freemium-products-use-our-brains-against-us
Crystal Invoke: Quiz RPG. (15 Aug 2014). Retrieved from http://quiz-rpg-the-world-of-mystic-wiz.wikia.com/wiki/Crystal_Invoke
Herrera, C. (24 Aug 2012). Nothing in Life Comes for Free: The Pros & Cons of the Freemium Model. Pulso Social. Retrieved from
http://pulsosocial.com/en/2012/08/24/nothing-in-life-comes-for-free-the-pros-cons-of-the-freemium-model/
Kotler, P. & Keller, K.L. (2011). Marketing Management. (14th ed.). Upper Saddle River, NJ: Pearson Education.
Spotify Premium. Retrieved from
https://www.spotify.com/us/premium/?utm_source=google&utm_medium=growth_paid&utm_campaign=Brand_US_Exact&gclid=Cj
wKEAjwpcGfBRDni__JqrTIqx4SJAB9BpSOJDaHip9ul6kBXvDSfMj1mhlkN2xozrSKtQfot68wOxoCSjDw_wcB&dclid=CKvFyarTm8ACFREwa
QodcY4ACg