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. Basic Premium Factor

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

    An accounting term in the insurance business used to describe ...
  3. Advance Premium Fund

    Insurance companies who receive advance premiums must account ...
  4. Net Premiums Written

    The sum of premiums written by an insurance company over the ...
  5. Premium Balance

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

    The amount of total premiums collected by an insurance company ...
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. Small Business

    What is a Business Model?

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

    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. Financial Advisor

    Understanding Life Insurance Premiums

    When buying permanent life insurance, what amount of premium should you pay for the coverage?
  6. Small Business

    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
  7. Investing

    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.
  8. Insights

    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.
  9. Personal Finance

    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.
  10. Insurance

    Explaining Premiums

    Premium has a few different meanings in the financial world.
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 do you need to know to create a business model?

    Learn what a business model is, its importance and the primary elements that are needed in order to create a successful business ... Read Answer >>
  3. 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 >>
  4. 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 >>
  5. 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 >>
  6. 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 >>
Hot Definitions
  1. Federal Direct Loan Program

    A program that provides low-interest loans to postsecondary students and their parents. The William D. Ford Federal Direct ...
  2. Cash Flow

    The net amount of cash and cash-equivalents moving into and out of a business. Positive cash flow indicates that a company's ...
  3. PLUS Loan

    A low-cost student loan offered to parents of students currently enrolled in post-secondary education. With a PLUS Loan, ...
  4. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  5. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  6. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
Trading Center