It’s very common today for games to be available to play on pc or iOS free of charge. It’s been one of the biggest trends within the software industry to introduce entry level versions of software that remains free to use for users as long as they want.
For consumers, the freemium can be a good thing overall. When you’re in the mood to play something different, there’s no need to pay for it. There’s a vast selection of gaming apps that you can access almost instantly and start playing. And when you tire of one, you can switch to another just as quickly.
It’s true that there’s a limit to the appeal of freemium games, especially when you can only get through a few levels, but that’s when you make the choice whether to convert to being a paying customer or not. It really depends on how much you like the game. Of course, playing casino games online at sites like Full Tilt poker is similar to freemiums in some ways. Most of the time, people play the games for real cash, but they can switch to playing in practice mode whenever they either don’t have any spare funds to play, or they just want the entertainment without the cost.
But what about from a business perspective? How useful are freemiums in increasing your sales?
What freemium games do is allow a business to create a large user base very quickly, usually through word of mouth recommendations. The owner can then make money through selling advertising or getting users to pay for premium software features or services.
The Pros of the Freemium Business Model
- The more people who use your free software, the more users will want to use your free software. Although you’ll have double the free users initially, some of those new users may become paying customers at a later date.
- You don’t have to sell from scratch to freemium users who choose to upgrade to the paid version. You’ve already sold them on the idea; it’s a lesser jump getting them to convert to paying for the service than buying in from the start.
- Winning customers over with a freemium product prevents your competition locking them into theirs.
- Freemium numbers can make a start-up look impressive from a stats perspective. They can boast about having multiple users, even if that doesn’t translate to huge numbers of sales.
- Freemiums are also great for beta testing a product on a large group of users (and users don’t hold back on giving feedback of where there are any glitches).
- Even if you don’t convert people to being paid customers, the freemium user base can sometimes generate advertising revenue.
The Cons of the Freemium Business Model
- Often there are low conversion rates to the paid version of the software; it can be as low as 1%, though this obviously varies dramatically.
- Any business offering customer support or technical help to a free user audience needs to invest in providing that support, without necessarily generating the revenue to cover the costs. However, if you don’t make customer support available to your free users, or only offer forum support as a reduced cost alternative, you probably push down your potential conversion to paid users. It also won’t be great for your reputation.
- Many consumers will be happy to remain free users, so it’s questionable whether you can ever justify counting them as customers.
- Some schools of thought suggest that offering a free version will reduce the conversion rates of people who have a free trial of the paid product, so the freemium could work against your paid product uptake.
From a business model perspective, there seems to be a good number of points for and against offering freemium games. From the consumers’ point of view, freemiums are there to be used and enjoyed. Whether you decide to upgrade and become a paid user is down to your level of interest in the game and whether it warrants any expense on your part.