Freemium Business Model: Grow Your Customer Base and Make Money Without Selling

What is the freemium business model all about? And how can you implement it to generate income while giving away your product or services?

In the digital economy, the road to financial independence is as winding and diverse as your nomadic journeys. And, there are at least as many ways you can model your business to get you where you want to go. Across this vast landscape, the freemium business model emerges as a beacon of opportunity.

For more than 17 years, my wife Rene and I have navigated the challenges and triumphs of earning a living on the road. We learned early on, the best way to support our nomadic lifestyle was to develop multiple revenue streams. And, one of the most effective strategies we’ve embraced is offering value without a price tag upfront. With our Tripawds membership community, we’ve discovered that success is not just about selling products or services. The most important part is building relationships and providing real value that leads to sustainable income.

Are you still figuring out how to formulate your own business strategy? Or looking for a way to up your game without going for the hard sell? Follow along with me here as I explore the freemium business model. I share how it can transform the way you make money, by turning every encounter into a potential investment in your future success. And, I have a funny story about how we came up with it. Well, we didn’t exactly come up with the business model itself…

freemium business model
What is the freemium business model?

Defining the Freemium Business Model

The freemium business model is one strategic approach for offering a basic core set of products or services for free. Then, you reserve more advanced features or premium content for paying customers. Implementing this model creates a win-win scenario. Your users gain access to valuable resources without any immediate cost. This fosters trust and encourages more engagement. Meanwhile, your business builds a broad user base with lucrative upselling opportunities. The trick is to effectively balance what your giving away with whatever is sold. Ultimately, you can fine tune that balance to maximize your reach and revenue without alienating their audience.

Venture capitalist Fred Wilson first proposed this idea of providing such tiered service offerings to Jarid Lukin of the investment portfolio company Alacra in 2006. As a result, Lukin coined the term “Freemium” which combines the words “free” and “premium”.

Wilson had envisioned a business model that combines offering a base level of services or products at no cost. Users then have the option to purchase advanced features or enhancements for a fee. This concept quickly resonated throughout the technology and startup communities. Freemium captured the essence of a growing trend to attract a broad user base with free offerings while monetizing premium services. The freemium business model has since become a foundational strategy in many successful digital business. It allows companies to scale rapidly by leveraging the dual appeal of free access and value-added premium services. And, it’s worked for us so far.

freemium business model
Tripawds Freemium Blog Network

How We Implement Freemium Content at Tripawds

Rene and I have been managing and monetizing our online endeavors using the freemium business model for…well, forever. We’ve used this strategy successfully for years for both our Live Work Dream blog and the Tripawds support community. With both websites, we create a vast amount of free content. Our readers, can then opt to pay a premium for our books and e-books.

The Freemium business model is especially relevant at Tripawds. And, that begins with a funny story. I explain the whole thing in our Be More Dog book. But it started with us attending the Blog Paws pet blogging conference years ago.

We were at a social mixer being held one evening, and noticed a well dressed woman sitting by herself. We introduced ourselves, and answered a few questions about our
three-legged dog blog…

“So, what’s your business model?” She was direct and straightforward.

A blank stare fell upon Rene’s face as she turned to Jim. Every other blogger they had met only wanted to talk about dogs and cats. Or ferrets. This woman was strictly business.

Thinking fast, Jim replied, “We operate on the freemium business model.” He had learned about the term long before, but it was that very moment when he was put on the spot to answer such a fundamental business question that the term came to mind. “Freemium” was precisely what they were doing.

“We offer a bunch of free content and services and charge a premium for extra features and benefits.” He went on to describe their Tripawds Supporter Blogs platform…

~ Be More Dog: Learning to Live in the Now
Chapter 16: Following Their Passion

The next day, we we discovered that woman we met was the keynote speaker for the event. And she is still a coach and mentor today. Our Tripawds Supporter platform is the cornerstone of our freemium membership community. We now host more than 2,000 three legged dog and cat blogs on the network. Most of them are free, where members can share their stories and upload photos. We monetize these with some Google ads, but don’t make much worth mentioning there. For a small premium, however, we’ll automatically remove all the ads, increase the upload quota, and unlock additional features.

Freemium Business Model
Recurring low-price subscriptions are well worth the wait

I say small premium, because members can upgrade their blog for as little as $1.50 per month. Others who see the value of supporting our efforts choose to pay more. While some pay as much as $90 per year, the majority choose the minimum of a few bucks each month. This quickly adds up when you have hundreds of supporters subscribing to your free service.

freemium business model
Free introductory services and premium micropayments add up.

In addition, Tripawds community members have access to a free live chat, popular discussion forums, the Tripawds Talk Radio podcast, and more than 17 years of helpful amputation recovery and care content. All of this information is free. But not everybody wants to take the time to search. That’s why we also offer premium e-books. For an affordable price, anyone can download fast answers to the most common concerns.

This freemium approach has helped us grow your community, improve member loyalty, and create a sustainable income.

Framing Freemium in Other Contexts

The freemium business model isn’t just for digital nomads hosting a membership community like we do. It’s a versatile strategy that spans any industry or niche.

Other examples include:

  • Software and Apps: Many software companies offer basic versions of their products for free, charging for access to advanced features or additional storage. This allows users to become familiar with the software before committing financially.
  • Content Creators and Educators: Individuals or companies producing content (like blogs, videos, or courses) might provide free access to some content to build a following, while offering in-depth, premium content to subscribers.
  • Online Marketplaces and E-commerce Platforms: Some online marketplaces offer free listings to sellers, charging a fee only when an item is sold or for premium listing features that enhance visibility.

Will the Freemium Business Model Work for You?

With the sensitive nature of our niche business, we never wanted to do any hard selling to our community members. If you’re exploring ways to monetize your passion project without relying on typical sales tactics, the freemium business model may work for you too. It offers a compelling alternative by providing genuine value upfront and building a community around your brand. Then, you can create a sustainable revenue stream that grows with your audience.

However, it’s important to carefully consider what you can offer for free versus what should be premium to ensure your business remains profitable. You can put a lot of work into developing those free services. We sure did! So make sure you make up for that with whatever premium offerings you provide. With creativity and strategic planning, the freemium model can be a game-changer for your business.

Jim Nelson