Freemium

DEFINITION of 'Freemium'

A combination of the words "free" and "premium" used to describe a business model that offers both free and premium services. The freemium business model works by offering simple and basic services for free for the user to try and more advanced or additional features at a premium. This is a common practice with many software companies, who offer basic software free to try but with limited capabilities.

BREAKING DOWN 'Freemium'

The freemium business model is popular for companies just starting out as they try to lure users to their software or service. An example of a freemium business model is Skype, a company that allows you to make calls over the Internet. Their basic service is free, but for more advanced services you have to pay a premium.

RELATED TERMS
  1. Business Model

    The plan implemented by a company to generate revenue and make ...
  2. Basic Premium Factor

    The acquisition expenses, underwriting expenses and profit, as ...
  3. Written Premium

    An accounting term in the insurance business used to describe ...
  4. Premium Balance

    The amount of premium that is owed to an insurer for a policy, ...
  5. Earned Premium

    The amount of total premiums collected by an insurance company ...
  6. Model Risk

    A type of risk that occurs when a financial model used to measure ...
Related Articles
  1. Financial Advisor

    When Going 'Freemium' Works for Advisors

    Here's how advisors can incorporate free services into their businesses without giving away the store or drawing skepticism among potential clients.
  2. Investing

    What is a Business Model?

    Business model is the term for a company’s plan as to how it will earn revenue.
  3. Markets

    Getting To Know Business Models

    Learning how to assess business models helps investors identify companies that are the best investments.
  4. Financial Advisor

    Is ‘Free’ Now the Best Price for Online Advice?

    For many investors, robo-advisors may be a better deal than traditional financial advisors, though they should know what kind of tradeoffs are involved.
  5. Trading

    The Top 10 Hidden Factors Affecting Software Stocks

    Want to invest in software? Here are the most important factors affecting profits, revenues, and stock price of software companies
  6. Entrepreneurship & Small Business

    Best Teleconference Software For Small Businesses

    Here's a look at some teleconferencing software and apps that could suit a number of small business requirements.
  7. Markets

    The Industry Handbook: Software Industry

    Discover how the software industry has changed throughout the years to become a mainstay for businesses from programming to software as a service.
  8. Managing Wealth

    The Best Financial Modeling Courses for Investment Bankers

    Obtain information, both general and comparative, about the best available financial modeling courses for individuals pursuing a career in investment banking.
  9. Markets

    Explaining Premiums

    Premium has a few different meanings in the financial world.
  10. Investing

    DCF Vs. Comparables: Which One To Use

    DCF and Comparables models are widely used in equity valuation. We explain the pros and cons of each method.
RELATED FAQS
  1. What are some examples of different types of business models in major industries?

    Learn what types of business models are currently being used in the marketplace as well as examples of models that work for ... Read Answer >>
  2. What is the point of developing a business model?

    Learn some of the benefits of developing a business model and how business models are used. Consider an example of business ... Read Answer >>
  3. Is market risk premium the same for all investors and investments?

    Learn about how market risk premiums are determined, how they are calculated, why some assets require higher premiums and ... Read Answer >>
  4. How do Internet companies profit if they give away their services for free?

    Learn how companies in the Internet sector make a profit when service, content and user applications are offered at no cost ... Read Answer >>
  5. How do I calculate insurance premium tax?

    Find out how your health insurance premiums can affect your income taxes, including when you may be able to deduct premium ... Read Answer >>
  6. How do subscription business models work?

    Understand how a subscription business model works and why companies prefer a subscription business model over a traditional ... Read Answer >>
Hot Definitions
  1. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  2. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  3. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  4. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
  5. Weighted Average Life - WAL

    The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, ...
  6. Real Rate Of Return

    The annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other ...
Trading Center