Freemium
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Freemium is a business model which works by offering basic services for free, while charging a premium for advanced or special features. The word freemium is a portmanteau created by combining the two aspects of the business model: free and premium. The business model has gained popularity with Web 2.0 companies.[1]
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[edit] Origin
The freemium business model was articulated by venture capitalist Fred Wilson on 23 March 2006.[2]
"Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc., then offer premium priced value added services or an enhanced version of your service to your customer base."
After describing the business model, Wilson asked for suggestions as to what to call it. Within a matter of hours, more than 30 name suggestions were given by his blog readers. One such suggestion came from Jarid Lukin of Alacra, one of Wilson's portfolio companies. Lukin coined the term "freemium", and Wilson and his audience adopted it for the business model.[3] The term has since appeared in Wired Magazine and Business 2.0, and has been used by prominent bloggers such as Chris Anderson and Tom Evslin.
A freemium rate is the ratio of free to fee services provided.
[edit] See also
[edit] References
- ^ "A Business Model VCs Love". Business 2.0. 2006-10-01. http://money.cnn.com/magazines/business2/business2_archive/2006/10/01/8387115/index.htm.
- ^ "Fred Wilson's blog, A VC". http://avc.blogs.com/a_vc/2006/03/my_favorite_bus.html.
- ^ "Jarid Lukin's LinkedIn Profile". http://www.linkedin.com/in/jarid.
