What is Freemium?
Freemium is a business model that delivers a free product or service and charges a premium for advanced features, functionality or related products and services. As you might realize, the term ‘freemium’ combines two words: ‘free’ and ‘premium’. It is a two-level customer acquisition model that aims to establish a trusting relationship between a company and its customer base by dividing users into free and premium levels.
The freemium model has been gaining traction in recent years. Especially in the world of technology and development, where it has become efficient due to its way of increasing brand awareness and boosting conversions without being laborious, time-consuming and expensive.
The field in which the Freemium Model is most effective
In the technology realm, a standard business model consists in offering a free basic service and then an upgrade to a premium service. This ‘freemium’ model is viral in software downloads and online subscriptions, where a ‘lite’ version with limited functions is available for free and the possibility of upgrading to a full version with all features. Think of the world’s most famous brands, such as Spotify, YouTube, Skype or LinkedIn, that use the freemium model to increase revenue with micropayments.
It is also called the internet-based business model, which offers an essential service to the customer, and then it makes the user purchase the premium (paid) version.
WiFi hotspots and the Freemium Model enforcement
WiFi hotspots are one of the latest trends worldwide and represent a significant revenue opportunity for many businesses in various sectors. So let’s see how creating freemium WiFi hotspots can be exciting in the WiFi market.
Freemium Internet is one of the fastest growing trends in hospitality, where authenticated guests enjoy free essential Internet and can upgrade to a more premium service.
There are four primary ways to offer a premium service: larger bandwidth, upgrading the amount of time or data allowance; eliminating advertisements; and allowing multiple devices.
Why is the Freemium Model in hotspots consistently successful?
It can happen that not all users will buy a premium plan. And that can be the critical aspect of the freemium business model. Most users will purchase it, while few of them will limit themselves to enjoying the free essentials, which impacts the conversion rate of premium users. But the question is – Is that viable to make a profit from free users?
There are other ways to make money from the free users. One is to display advertisements to free users and partner with the ad networks. Since the free plan attracts many people towards the brand, it increases the user base. If the number of users is increased, it seemingly increases the profit-making potential.
The other profit you can get from a freemium model is the data capture. As soon as users register to the network from their WiFi device via the captive portal, they can surf the WiFi network for free for a limited time. In exchange for the free connection, users are asked to share their personal data: in this case, user information is the main benefit for the WiFi business.
With the least marketing effort, the company, offering freemium WiFi, can gain money from premium users or can collect user data and display its logo, advertisements and promotions on the login page. In addition, it can use the information obtained for its own marketing and sales campaigns.
You can now begin to consider the freemium model business as a viable strategy for your hotspots. The freemium model is suitable for any reality if thought out and appropriately created. If you do choose to offer a freemium WiFi plan, you’ll need a clear plan for which features are included in the premium version and which you’ll limit to free users. There’s no one better than you who knows your customers, so make sure your basic users get enough out of their experience to entice them to upgrade, but not so many that they don’t see the value of doing so. And remember…
–A satisfied customer is the best business strategy of all. -Michael LeBoeuf.