The Power of Free – the Freemium Business Model

FreemiumHow do you build a business by giving content away for free?  I wondered this myself when developing my initial sales strategy for Chinese Learn Online.  Here were the issues I had to deal with:

  1. I had no marketing budget.
  2. I had no brand recognition, and thus no credibility with my customers.

My solution? Give my main product away for free!  Then offer an upsell to a paid product.  (This is also known as a freemium strategy).

This solved both issues above.

  1. By making the product free, it attracted a lot of users, who then recommended it to other users.
  2. Using the product sold users on its quality, thus building credibility.

Obviously this freemium strategy only works if you have a good product to begin with.  One that people would recommend to others.

The next issue was what to offer in the upsell.  I had to make sure that whatever it was, the core product had to remain free and completely usable without purchasing the upsell.  Some options here include:

  1. Supplement the functionality of the product.
  2. Provide a more convenient delivery system of the free product.

I used both options in my case.  I sold PDF transcripts of the free audio (the audio was still completely usable without the transcripts).  I also sold a bulk download of the free lesson packages.  This let a user download all lessons of a set together, rather than having to download them for free.

There are many famous examples of the freemium model at work, with people paying for items that can be had in other forms for free.  Many authors have had huge sales of books that are also available in free PDF form.  In this case, users are willing to pay for the physical form over the free digital version.

Can the freemium model be used successfully in your business?

For more ideas based around freemium and other free models, read the excellent book Free: How Today’s Smartest Businesses Profit by Giving Something for Nothing by Chris Anderson.