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Choosing the right pricing is very important for your company in both the short and long term. Many companies on the market are opting for a Freemium strategy, which is designed to increase the number of users and multiply the company's profits. But what is this strategy and is it right for everyone? Let's explore this question in our new article and start with a definition.

What is Freemium?

Freemium (free + premium) is a pricing strategy that offers a free version of a product with the ability to expand functionality for an additional fee. All users can access the basic version of the software, but only premium subscribers enjoy exclusive advanced features.

A prime example of using this strategy is Apple with the ability to increase storage on iCloud for an additional fee. Another example is the LinkedIn platform, which offers the ability to purchase access to advanced job search filters.

Companies use freemium to interest potential users and encourage them to explore the product without financial commitment. In this way, companies gain user insights, promote word of mouth and create upsell opportunities.

In addition to the obvious advantages, you should consciously approach possible risks and try to minimize their occurrence. To avoid falling into the trap, pay attention to the recommendations below.

Tips for using Fremium for SaaS companies:

1. Keep a balance between free and paid offers.

You shouldn't offer too many features for free, as the value of your offer may drop. Focus on features that are easy to use and will work for many people, and leave customized and exclusive solutions for the premium class. In addition, companies should make sure that the revenue from premium upgrades exceeds the costs associated with maintaining a large user base for free features.

2. Clearly define the terms of cooperation and discuss pricing.

You should help your customers understand the difference between free and paid services, and communicate the benefits of switching between plans. Demonstrate clarity and consistency in the conversation, and avoid hidden fees or unclear terms. Consumers should be aware of your privacy policy and how their data will be used. It's important that customers can trust you and want to expand their use of your products.

3. Share your customers' success stories.

Showcase real-life success stories of customers who have achieved significant results by using your products or services. These stories can be in the form of presentations or user testimonials.

Emphasize the specific problems they faced and how your product helped them fix those problems. This social proof helps build trust and demonstrates the value of your product to potential paying users.

The Freemium strategy presents companies with both challenges and opportunities. Success can only be guaranteed through careful planning and continuous improvement. We hope that following our tips will help increase the efficiency of your business!

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