Freemium Vs Free Trials: Find your Best Strategy

“Freemium Vs Free Trials?” is a question a lot of companies will have to consider at some point. Freemium and Free trials are some of the most popular acquisition strategies, which are part of the product marketing cycle. They are exceptional in building brand awareness, provide exponential growth, reducing marketing costs and the time to market.

Freemium model is a customer acquisition strategy where basic features are offered for free and more advanced features are offered for a premium. 

Users basically get to try out a new product for an unlimited amount of time and make a decision on whether or not to purchase a premium version of the same product.

On the other hand, in a Free Trial customer acquisition strategy, the user is offer basic or all features for free for a limited amount of time. This way, users get to try out the service before making the purchase decision.

Both Free trials and Freemium strategies work a lot better than a traditional sales model, where a demo is provided to the customer, because the prices are kept exceptionally low and prevent competitor expansion, for a specified time period.

These are increasingly popular on-boarding strategies for desktop and mobile softwares and applications.

In both of these models, users can explore your product and see if it works for them at no cost.
These strategies compete with each other in terms of freedom, flexibility, and duration for which they are offered.

Freemiums do not have a time-frame for which the service remains free. Freemium thrives in a highly competitive and disruptive market. It creates a magnetic field that draws the users towards it with ease of use and low cost of use. No barrier for entry: There is no need to enter things like credit card information for a freemium service. Customers need to purchase the premium version to get the features in addition to the free features, in the basic version. If you can structure your business around it, a freemium model is a great way to get people through the door.

This strategy needs a sizable market for users to convert. It cannot be a niche service with a tiny audience or you will end up giving away the service for free to those few willing to use and pay for it. Freemiums creates a greater incentive for the user to adjust their needs around the free service, if it means they can continue to use it for free. Users are a bit reluctant to buy a premium version as they are already getting plenty of value from the free version, creating a lower conversion rate of 2% to 5%. The lack of deadline provides greater flexibility to the users, empowering them and giving an overall better user experience.

The idea behind Free trials is to demonstrate the value of the product to the customer and lead them to a purchase.  Free trials usually allow the users access to all or almost all features of the service, for the specified time. Users will be charged for the premium version, if they do not cancel the trial within the specified time.This time limit provides the users some time to make the purchase decision, while actively using the product, as opposed to other models like a one-time product demo. Free trials enjoy a higher conversion rate, of 5% to 20% due to the urgency that it creates because of the deadline.

Since it has a higher conversion rate, the market size can be a bit smaller than the freemium base. This deadline also makes the free trial inflexible for a lot of monetarily strapped users or the casual users, both of which could have been converted.

It requires additional personal information from the users, including the payment information, in order to activate the free trial. They generally lack the ease of use that freemiums provide, as the free trial usually offers the full product with minimal to no feature limitations as the limitation is in the time frame. Trials end within the specified time. Usually 1 week to a month. For organized people, this is no problem. But for some people, it creates an atmosphere of pressure and can affect their assessments.

Additional information can be gained from the users with an end-of-trial survey, where if they are trying to cancel the free trial, they can be asked for the reasons. It will include questions like,

Was the product too expensive?

Were the features inadequate?

Was the time duration too short?

Other reasons (where they can be prompted to specify)

There are various hybrid models which combine the best qualities of both of these strategies. Below are the 2 most common models:

➣ Freemium with a free Trial:

If you have a lot of features within your service, you can lure the user in with a freemium offering where they get a lot of value and combine that with a free trial for the premium version with the additional or blocked features. This allows the user to experience the features before they decide to upgrade.

➣ Free Trial with a Freemium:

If the user decides to end a trial without making a purchase, they can be offered a freemium version of the service with the basic features, as a form of advertisement. This way the user can be locked in and be prevented from going to a competitor for the service.

Overall, both freemium and free trials come with their own set of Pros and Cons. These need to be assessed by individual providers as each of them have their own unique set of needs operating under unique environments and circumstances.