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Freemium is a business strategy or model implemented by business owners or service providers to allow a user to use the basic features of a service or product free of charge for a limited time period. The service providers normally charge a premium for additional or advanced features. The term freemium is a blend of the two words - free and premium.
The word freemium was suggested by Jarid Lukin of Alacra in 2006 in response to the idea proposed by venture capitalist Fred Wilson. The freemium model is widely implemented by Web-based services.
Companies implementing a freemium business model often due so to develop an initial customer base using a version of their product with limited features, limited time or limited access. The goal is to get enough users to spread the idea to develop a larger base of customers that will pay for certain services. Or, alternatively, with a large enough user base, the service can be monetized with advertising.