In our text books we have a boxed example on “freemium” in one of our pricing chapters. Freemium refers to “giving away service to users and making money when some opt to pay for additional features.” As consumers we love this strategy — who doesn’t want something for free (especially when living on a student budget). It certainly encourages people to try your product. But how can you make money giving something away?
Evernote, a suite of software and services used for taking and storing notes, has used the freemium business model with great success. This Fast Company article, “Evernote CEO Phil Libin’s 3 Steps to ‘Freemium’ Success” (July 1, 2010) describes how it works with real number examples.