Freemium business models

Freemium model – Many companies use the Freemium model, meaning the base service is free, but you pay premiums for added services, capacity, or convenience. This model works because people value the free service, make it a part of their routine, and are willing to pay a premium for added services. Usually just 3% to 5% of all users upgrade to paid services but the scale is such that it can be a profitable business. According to venture capitalist Fred Wilson, "free is a great way to make money. You just have to know how you are going to get paid for being free."

Everything Free is Subsidized - Everything "Free" is Subsidized - a blog post by Josh Kaufman (2009)
The Penny Gap - The Penny Gap - How will you get your users to pay you anything at all? by Josh Kopelman of Redeye VC
Free: a Tactic, not a Business Model - Free: a Tactic, not a Business Model by Anne Zelenka
See The difference between FREE and 1 cent by Don Dodge
Wikipedia's article on the subject - Freemium @ Wikipedia
Fred Wilson's blog article on Freemium and other business models - Venture capitalist Fred Wilson coined the term "freemium business model" in hist blog first on March 23, 2006
Fred Wilson's second article - Fred Wilson's second article on freemium business models
Dries Buytaert's article on 'freemium' - a blog post on freemium business models by Drupal founder Driest Buytaert (2008)
Making Money with Giveaways "The Freemium Business Model - Making Money with Giveaways" - an article by Jackie Headapohl, StartupNation (2007)
Will Freemium Save Web 2.0? - Will Freemium Save Web 2.0? - a blog post by Sean O'Malley (2008)
Beyond freemium: The Timebridge business model works - Beyond freemium: The Timebridge business model works an article by Rafe Needleman CNet News (2009)
Julien Wallen's freemium business model map - A map on freemium business models. A great blog post by Julien Wallen (2009)
TBMDB's article on the subject - an article about freemium business models in the Business Model Database (TBMDB) by Anders Sundelin (2009)
Taylor Barr's Article - a blog post on freemium business models and why they don't work for everyone; by Taylor Barr (2009)
Rand Fishkin's article - Rand Fishkin's article on freemium business models @ SEOMoz.org (2009)
Mark Evans' article - Mark Evans says that freemium is not a business model
Aaron Wall's blog post on Free - a great blog post on "Free" by Aaron Wall, SEOBook.com (2009)


Free Delivery Worldwide


Free as a pricing strategy

Understanding Freemium - How to create and grow paying customers - Understanding Freemium - How to create and grow paying customers
How to determine the optimal price for your web service - How to determine the optimal price for your web service

Less than free

Google Redefines Disruption: The "Less Than Free" Business Model - Google Redefines Disruption: The "Less Than Free" Business Model: a great thought-provoking blog post by Bill Gurley (2009)


The Economics of Giving it Away (For Free)

The Economics of Giving It Away - The Economics of Giving it Away: The minority of customers who pay subsidize the majority who do not. A Wall Street Journal article written by Chris Anderson, Author of The Long Tail


Books on the Freemium business model

Free: The Future of a Radical Price - Chris Anderson: FREE, the future of a radical price: In the digital marketplace, the most effective price is no price at all, argues Anderson (The Long Tail). He illustrates how savvy businesses are raking it in with indirect routes from product to revenue with such models as cross-subsidies (giving away a DVR to sell cable service) and freemiums (offering Flickr for free while selling the superior FlickrPro to serious users). New media models have allowed successes like Obama's campaign billboards on Xbox Live, Webkinz dolls and Radiohead's name-your-own-price experiment with its latest album. A generational and global shift is at play—those below 30 won't pay for information, knowing it will be available somewhere for free, and in China, piracy accounts for about 95% of music consumption—to the delight of artists and labels, who profit off free publicity through concerts and merchandising. Anderson provides a thorough overview of the history of pricing and commerce, the mental transaction costs that differentiate zero and any other price into two entirely different markets, the psychology of digital piracy and the open-source war between Microsoft and Linux. As in Anderson's previous book, the thought-provoking material is matched by a delivery that is nothing short of scintillating. (Copyright (c) Reed Business Information 2009)

Videos on Frememium business models

Revenue Bootcamp: Chris Anderson - The editor-in-chief at Wired Magazine is talking about his new book, Free: The Future of a Radical Price and what he called the "animal forces of digital economics" at work on the Web.



Other Successful Web-based Business Models

Amazon's Business Model - Amazon's Business Model
Craigslist Business Model - Craigslist Business Model
eBay's Business Model - eBay's Business Model
Google's Business Model - Google's Business Model
Microsoft's Business Model - Microsoft's Business Model
Yahoo Business Model - Yahoo Business Model