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FBusiness modelUpdated 2 Nov 2026

Freemium

A free tier that is useful, plus a paid tier for the people who need more.

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.

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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.

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