Freemium

What Does Freemium Mean?

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 words “free” and “premium.”

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Techopedia Explains Freemium

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 do 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.

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Margaret Rouse
Technology Expert

Margaret is an award-winning technical writer and teacher known for her ability to explain complex technical subjects to a non-technical business audience. Over the past twenty years, her IT definitions have been published by Que in an encyclopedia of technology terms and cited in articles by the New York Times, Time Magazine, USA Today, ZDNet, PC Magazine, and Discovery Magazine. She joined Techopedia in 2011. Margaret's idea of a fun day is helping IT and business professionals learn to speak each other’s highly specialized languages.