Freemium is the name for a business model of providing products or services by which basics are provided for free, but an advanced version (e.g. extended functions or content) is charged. Word Freemium is composed from words free (free of charge) and premium (advanced paid services or products). There are following basic freemium categories.
- Feature Limited Freemium - basic functions are for free, user is paying for advanced functions or integration
- Time Limited Freemium - all functions are free for limited period of time
- Capacity Limited Freemium - basic storage capacity is for free, user is paying for extended or unlimited space (email services)
- Seat Limited Freemium - basic amount of users is for free, user (customer) is paying for extended or unlimited amount of users
- Customer Class Limited Freemium - function, software or content is for free for special groups of customers (e.g. students, SMEs)
Freemium in practice: Freemium is a business model often used in outsourced business software (XaaS) where some functions are for free and some are paid. As example of Freemium software are internet security software, antivirus software or Skype.