Definition
Freemium gives a real product away so a fraction of users will pay for limits, power, or support. The free tier is a distribution channel. It only works if the upgrade moment is obvious and the cost to serve free users does not eat the paid margin.
In the room
How the word shows up in a real conversation.
A invoicing tool lets three clients invoice free. The fourth client, GST filing, or a CA seat is paid. The free tier is a demo that never expires — and a filter for people who will never pay.
Common mistake
Making the free tier so complete that nobody upgrades, or so empty that nobody starts. Both are failed freemium.
See also
SaaS (Software as a Service)
Cloud-based software delivery model where applications are hosted and accessed online.
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Product-led growth (PLG)
The product itself acquires, converts, and expands customers — not only a sales team.
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Customer Acquisition Cost (CAC)
What you spend in sales and marketing to win one new paying customer.
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Monthly Recurring Revenue (MRR)
Predictable subscription revenue normalised to a month, excluding one-off fees.
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