Freemium Upside Down Business Model

The principle is that subscribers pay a monthly or a yearly subscription fee in return for access to a service which will not be charged when used. The non-subscribers may also have access to the service but they will have to pay a premium price to use it.

A well-known example is:

  • Road recovery services

Before you start

  • Assess the value of the service you want to provide to see how essential it is
  • Estimate the risk aversion of your target group
  • Calculate the amount subscribers are willing to pay
  • Evaluate infrastructure and maintenance costs

How to start?

  • Provide service at normal price in order to identify different costs and to obtain feedback from users paying for these costs.

What are the key success factors?

  • Service identified as highly valuable and necessary

How to cope with the threats?

  • Alternatives to the risk which is covered such as public transports for road recovery services
    • Cover the alternatives too
    • Facilitate the usage of alternatives
    • Make subscription dependent on the usage of the main product
  • Lower risk aversion from subscription users
    • Tell them about the costs in case not covered
    • Make usage to coverage mandatory
  • Subscribers who overuse the service
    • Provide advice to limit the risk of usage
  • Lower cost structure offered by competitors
    • Provide premium service

Contact me

    Share on: