Pricing Strategy - Freemium + Upsell

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This is part of a mini-series of articles on 

pricing strategies.

In the history, (before the late 90’s) most companies had one monetization strategy (and it probably wasn’t called that) – the one time transaction. They had a product and people bought it. When it wore out or broke, companies hoped that people would buy another one.

Of course there were exceptions, cable television, phone, newspapers , magazines, even milk delivery were some of the pioneers of the subscription pricing strategy.

 


 

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Then cloud computing was born and everything changed. Salesforce.com was the first to move to the cloud in 1999 offering enterprise applications on the web.

Amazon started a couple of years later and it wasn’t long until all of the big players joined them.

By 2010 most the small players were also looking to take advantage of this new way to do business. From all of this, very different pricing strategies from the old 'one-time transaction' were been born.

 


Icon with images to help illustrate recurring billing challenges


 

Over the next few weeks, we'll look at many pricing strategies, but today's post will focus on one known commonly as Freemium+Upsell.

In this strategy a company offers people a 'free forever service, but also offers a paid version which includes more features, or removes advertising, etc.

Freemium Pricing Strategy LinkedIn is a good example of the freemium+upsell strategy. Anyone can sign up for a LinkedIn account, it's free and all you need is an email address to get started.

Once you sign up you can create a profile and start asking people to join your network, There is no limit on how long you can keep what LinkedIn calls this Basic account.

But, if you want to see a full list of people who have have viewed your profile, or use the InMail feature, or get better, faster access to job posts, you'll need a Premium account, and it comes with a price tag.

LinkedIn does a great job of incorporating advertising for their Premium account in the basic or free account.

They ‘tease’ you by giving you some of the information, and then show you how you can get more.

If you click one of the teaser ads strategically placed within the free account, you are taken to a 'buy' page where you can pay a monthly or an annual fee - often offered at a discount - for a LinkedIn premium account.

This is just one of the various pricing strategies we’ll look at in this blog. Are you using one or several of these strategies?


To read more on our pricing strategies series, check out:

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Tags: Subscription Billing Recurring Billing

Fusebill Inc.

Fusebill simplifies subscription and billing management by automating many manual accounting and financial processes and workflows. Our cloud-based platform gives companies the freedom to grow their businesses, the flexibility to capitalize on new product opportunities, and the agility to maintain a competitive edge.

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