Freemium is a business model which works by offering basicgoods and/or services for free, while charging a premium for advanced orspecial features. The word freemium is created by combining the concepts freeand premium.

The Freemium model has been around for a while, but seems tobe coming into its own in the environment of Web 2.0.  The Freemium model in its pure form providesa base set of services free of charge in order to keep the traffic flow goingbut then charges a fee for specialized services.  The freemium model typically supports itsfree offering with advertising of some sort which then is used as an addedincentive to step up and pay for a premium product or a subscription-basedversion of the service.

It is in essence the inversion of the free sample. Ratherthan giving away one percent of your muffins to sell 99 percent, you're givingaway 90 percent of your goods for free to sell 10 percent. Your give away isintended to reach the largest possible audience. Freemium is something similarto certain video games, where you can play as much as you want up to level 10,and only in certain areas. If you want to access the rest of the game, you haveto pay.

Freemium is all about creating a traffic flow. If you canget a flow of visitors to your site, you can usually find a way to monetize.Free content is appealing and attracts people to your site. This is importantas it typically takes several visits to a site before someone buys a product.

Also free is great if you are not established as anauthority, and want people to get to know you more. Business relationships areall about trust and perceived value.

The downside to the freemium model comes in predicting thebalance between the free and the fee. If the free product is comprehensiveenough, the client may see no need to upgrade to the paid product. If the freeproduct falls short, the trust is broken and the client will not trust theupgrade to meet his or her expectations.

In today's ever-changing marketplace businesses struggle tostand out from the crowd. Freemium can set you apart and boost your marketshare.