Choosing between freemium and free trial models can make or break your customer acquisition strategy. Learn which approach works best for your business model, market, and growth objectives.
"Freemium Vs Free Trials" is a question a lot of companies still 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 equalization, for a specified time period.
These are tremendously 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 freemium, flexibility, and function 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 distributive market. If you are a start-up, freemium could end up costing you a lot of money. If you do not have an existing user base or the brand recognition, you can not stay in the red long. Think data cost! 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 bigger 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 that willing to pay and pay for it. Freemiums creates a greater incentive for the user to build their needs around the free service. If it means they can continue to use it for free. There are a lot easier to buy it from the freemium version as they are already getting the free service, empowering them not giving up 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 their subscription post the Free trial period. The users assume the risk of maker the purchase decision, while actively using the product, as opposed to other models; such is a one-time product demo. Free trials gives a higher conversion rate, of 5% to 25% also in the industry that a creates because of this deadline.
It requires additional personal information from the users, including the payment information, in order to activate the free trial. They generally ask the price of what the freemiums provide, to the free trial users offers the full product with refining to UI feature limitations or the toleration is to the free frame. Trials end within the specified time. Usually 1 week to a month. For organized people, this is no problem. But for beta people, it makes an atmosphere of pressure and can affect their assessments.
There are various hybrid models which combine the best qualities of both of these strategies. Below are the 2 most common models.
If you have a lot of features within your service, you can live 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 standard features. This allows the user to experience the features before they decide to upgrade.
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 lured 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 procedures as each of them have their own unique set of needs operating under unique environments and circumstances.
EarnBill supports both freemium and free trial models with flexible billing automation to maximize your conversions
