What Makes the Freemium Model Work? | Business Models

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Over the past decade “freemium”-a combination of “free” and “premium”-has become a common business model among smartphone app developers, Internet startups, and other Software as a Service business (SaaS). But how does giving away a service something for free work to a businesses benefit? In this video, you'll learn how the freemium business model can be a viable strategy for explosive user growth along with challenges in executing freemium successfully.
Learning Objective #1: Describe the basic components of the freemium model.
Learning Objective #2: Understand the challenges associated with operating a freemium business model.
Learning Objective #3: Analyze the underlying economics of the freemium model.
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[@awesomesrish96]

Shouldn't it be (Paid users*cost per user) and not (paid users-cost per user)?

[@gambaweb]

I think so

[@abdelhafidachtaou2940]

Yes, he made a mistake.

[@TomGalland]

Great content!

[@jeksanjuan8659]

Thanks for this man. Really great stuff

[@Alanisbusinessacademy]

My pleasure!

[@pavelbavtra]

Nice series!

[@Alanisbusinessacademy]

Thank you, Pavel! Testing out a few new categories so it’s nice to hear positive comments.

[@leventeacs6371]

You uploaded this video on my 18th birthday
I don't know why you have so few view
This video is pretty awesome
But on the other side I am sad to know that developers make their product barely acceptable, just because they want to force us to pay for the better version

[@DavidRamosAuthor]

How do you create these videos? I love it!

[@ephraimmulilo7098]

It has Khan Academy vibes

[@derekgreen7319]

TH-cam switched to this model recently and I wouldnt be surprised if they went full on subscription service.

[@taniasiregar653]

They won’t lose massive users to its competitors

[@ReedoAce]

TH-cam premium has been available since 2019.. it’s great. No advertisements during videos and it had a better algorithm to suggest relatable songs videos compared to the free version

[@derekgreen7319]

@@ReedoAce this comment is very old. Unfortunately in this competitive market I don't think it's worth the money.

[@ReedoAce]

@@derekgreen7319 what would you choose instead? Spotify is doing the same thing.. we have Amazon prime, they are all at it

[@pratigyamahant3693]

hwo to make a case study?
try making video on this

[@markusporemba884]

one minor comment: its more of a PAYING user than a PAID user bc the user isnt paid to use the platform but he actually pays for it

[@movocode]

👍👌

[@FelixTetteh]

How do you subtract number of users from cost? The maths doesn’t add up. It’s like saying subtract the number of people who buy an ice cream from the cost of making the ice cream to know profit

[@markusporemba884]

you should more clrearly differentiate between cost per paid user and cost per free user because it makes a difference. i believe your calculation is false or not accurately declared enough.

[@jajj56]

This is not accurate though. For example, games run by EA such as SWGOH are made to milk as much money as possible. It isn't about the free users and premium users at all.
The whole reason that the 'freemium' models exist is to milk the money out of people who are either gambling addicts who cannot control their spending or people who are stupid enough to justify spending thousands to dollars a month on a few pixels thereby perpetuating the cycle.

[@jameslabrat5177]

HEARTHSTONE (from Activision - Blizzard), known as "the most expensive free game ever" by its players, is a great example of freemium game. If someone tells you that it's possible to enjoy the game without paying (with real cash), it's a freaking lie. I used to be dumb enough to buy 2 or 3 expansions and some packs, however, it was never enough to get most of the best cards to be successful in the game (even considering other game mechanics designed to be lame, like the resources when disenchanting or crafting cards). In other words, it's a PAY TO WIN game. That's how the developers designed it. Only players who spent lots of money could get the best cards to build good decks and have some fun. Otherwise, the game is painfully frustrating. When I finally realised all that crap and how stupid I was, I quit that f#$@ing game. And that made me feel much better...
(Sorry about my English, I know it's not perfect)

[@Alanisbusinessacademy]

Great example! Video games use this model a lot now.