What is Freemium?

The Freemium Model is a business strategy that is widely adopted by companies in the subscription-based business world. It entails offering certain product features at no cost, enabling users to engage with the essential functionalities. It allows users to experience and access the core features and decide whether to invest in the premium version of the same product. The freemium model aims to attract a broader audience while enticing a portion of users to become paying customers.

Synonyms for Freemium

There are various synonyms that people frequently use for Freemiums in the market. And they include:

  1. Freemium Pricing
  2. Freemium Plan
  3. Freemium Business Model

Freemium vs Free Trials

Now that we have addressed the synonymous terms for Freemium, it is time to discuss a concept often mistaken for Freemium vs Free Trials. There are differences between these two terms, and you must know them before strategizing them.

Users can access the key elements of a product or service’s free version, which is offered in a “freemium” model. This tactic seeks to draw a sizable user base and produce income through premium upgrades. Free trials, on the other hand, give users a temporary taste of the entire premium service. During the trial period, users are free to try out all features; however, they must then decide whether to subscribe. Both models promote user involvement, although freemium emphasises long-term usage while free trials concentrate on giving users a full experience for a brief period of time.

Freemium and free trials can be effective in turning users into paying clients, but results can vary. Although longer free access provided by freemium may increase user numbers, premium user conversion may be difficult. With its condensed premium experience, free trials give users a sense of urgency and let them thoroughly evaluate the value before committing. They might, however, occasionally lead to a decline in initial sign-ups. When deciding between these models, businesses must carefully assess their target market, the intricacy of their products, and their preferred revenue model. Free trials place a higher priority on demonstrating immediate value and promoting speedy decision-making than freemium, which fosters long-term engagement and user familiarity.


Freemium Model

Free Trials

System Access

Access limited features for free

Complete access to premium features for a limited time


No time limit, and basic features for unlimited time

Time-limited, access is allowed for a few weeks (Max 14 days)

Conversion Focus

The focus is the gradual conversion of users to paid customers

Aims at the speedy conversion within the given time duration

User Engagement


Enables users to test and try features extensively

Allows exploration of all premium features

Value Assessment


Users evaluate the basic value based on the limited access

Users can access the complete product

Types of Freemium Model

Today, businesses have diverse needs so, you will find variants of the freemium model. We are going to enlist them for you.

1.      Traditional/ Feature-Limited Freemium

A basic version of a product or service is provided for free under the traditional freemium model, with the opportunity to upgrade to a premium version for more features and functionality.

2.      Unlimited Freemium

Unrestricted freemium gives users unlimited access to a product’s main features without time or usage restrictions while still giving them the option to purchase for more premium features.

3.      Time-Limited Freemiums

It provides full access to the product for a limited time (e.g., 30 days which is usually more than what companies offer in a free trial), after which users are prompted to upgrade to the premium version.

4.      Storage-limited

Common in cloud storage services, provides a certain amount of free storage space, with the option to upgrade for more storage capacity.

5.      Multi-Tiered Freemium

It offers multiple tiers of both free and premium versions with varying levels of features, catering to different user needs.

6.      Support Limited Freemium

Offers basic customer support for free users, while premium users receive priority or enhanced customer support.

Advantages of the Freemium Model

Coming towards the advantages of the freemium model, though there are various business models and strategies, freemium is still a significant choice for various subscription businesses because it provides the following advantages:

  • Freemiums help startups and new businesses get noticed by customers in a short time because everyone is willing to give free products at least one go. So, it is a way to get a wider customer base in a short time.
  • As it helps in attracting customers, it strengthens the brand name hence playing an important role in branding.
  • If you opt for a freemium model, it automatically eliminates various financial and market entry barriers for you.
  • You can collect valuable feedback from customers and improve your product which will eventually play a role in improving product value.
  • Freemiums help you reach out to customers in highly competitive subscription business markets like SaaS and OTT etc.
  • While offering freemium, run ads that will motivate users to upgrade to premium.
  • Freemiums are also considered a way to lower the customer acquisition cost (CAC).

Disadvantages of the Freemium Model

It is important to discuss the disadvantages of the freemium model as well so that you would know when you need to avoid opting for the freemium model:

  • Sometimes freemiums can affect your product value and users take your product for granted and they never want to opt for premium. That’s the reason, many businesses have started offering free trials rather than freemiums.
  • This lack of interest in paid premiums can cause cannibalization which means freemiums kill the sales of the premium version of your product or services.
  • Sometimes, businesses offer freemium with a time limit to change this freemium to some paid plan, however, the customer cancels the subscription at the very early stage which in the end affects the revenue predictability.

So, these are the factors that a subscription or membership offering business must consider before offering a freemium model.

In Conclusion

“Freemium: Where value is unlocked, curiosity is satisfied, and the path to premium becomes a choice, not just a transaction, in the realm of subscription success.”

So, yes, freemiums are the best for a subscription business, but they help you when you use them wisely. If you have still ambiguities, then you can contact SubscriptionFlow experts at any time. Or schedule a demo for our subscription management platform to see how it will help you implement your freemium plan for your business.