The Freemium Business Model

I wrote a post last weekend called My Favorite Business Model.  I posted it earlier today. Here is how I described the business model:

Give your service away for free, possibly ad supported but maybe not,
acquire a lot of customers very efficiently through word of mouth,
referral networks, organic search marketing, etc, then offer premium
priced value added services or an enhanced version of your service to
your customer base.

At the end of the post I asked for some suggestions of what I should call this business model. I’ve gotten 33 comments already which may make this the most commented post I’ve ever written, surely its the most commented post in the first day I’ve ever written.

And at the risk of calling the game before it’s over, I have to go with Freemium.  I love the name, suggested by Jarid Lukin of the Flatiron portfolio company Alacra.

So from here on in, I will refer to this business model as the freemium business model.  I hope the name sticks because I love it.