Freemium

Freemium, a portmanteau of the words "free" and "premium", is a pricing strategy by which a basic product or service is provided free of charge, but money (a premium) is charged for additional features, services, or virtual (online) or physical (offline) goods that expand the functionality of the free version of the software.^[1]^[2] This business model has been used in the software industry since the 1980s. A subset of this model used by the video game industry is called free-to-play.

Limited features: A free video chat client may not include three-way video calling. Most free-to-play games fall into this category, as they offer virtual items that are either impossible or very slow to purchase with in-game currency but can be instantly purchased with real-world money.

Limited capacity: For example, is restricted to databases of 10 GB or less.

SQL Server Express

Limited use license: For example, most Autodesk or Microsoft software products with full features are free for student with an educational license. (See: .) Some apps, like CCleaner, are free for personal use only.

Microsoft Imagine

Limited use time: Most free-to-play games permit the user to play the game consecutively for a limited number of levels or turns; the player must either wait a period of time to play more or purchase the right to play more.

Limited support: Priority or real-time technical support may not be available for non-paying users. For example, offers all its software products free of charge. Its premium offerings only add various kinds of technical support.

Comodo

Limited or no access to online services that are only available by purchasing periodic subscriptions

Ways in which the product or service may be limited or restricted in the free version include:^[11]

Some software and services make all of the features available for free for a trial period, and then at the end of that period revert to operating as a feature-limited free version (e.g. Online Armor Personal Firewall). The user can unlock the premium features on payment of a license fee, as per the freemium model. Some businesses use a variation of the model known as "open core", in which the unsupported, feature-limited free version is also open-source software, but versions with additional features and official support are commercial software.^[12]

Significance[edit]

In June 2011, PC World reported that traditional anti-virus software had started to lose market share to freemium anti-virus products.^[13] By September 2012, all but two of the 50 highest-grossing apps in the Games section of Apple's iTunes App Store supported in-app purchases, leading Wired to conclude that game developers were now required to choose between including such purchases or foregoing a very substantial revenue stream.^[14] Beginning in 2013, the digital distribution platform Steam began to add numerous free-to-play and early-access games to its library, many of which utilized freemium marketing for their in-game economies. Due to criticism that the multiplayer games falling under this category were pay-to-win in nature or were low-quality and never finished development, Valve has since added stricter rules to its early-access and free-to-play policies.^[15]

Business models for open-source software

Crippleware

Pay to play

Pay what you want

Shareware

Threshold pledge system

(June 24, 2009). Free: The Future of a Radical Price (1st ed.). Hyperion. ISBN 978-1-4013-2290-8.

Anderson, Chris

Martins, Rui (January 2016). . RuiMartinsBlog.com. Archived from the original on May 13, 2019. Retrieved April 6, 2016.

"Freemium Marketing Strategy – The Good The Bad and The Villain"

Sterling, Bruce (June 2006). . Wired. Retrieved December 7, 2011.