The idea of freemium, a free service that offers a premium paid subscription, has existed for quite some time, but it is gaining attention. Some freemium-based companies quickly becoming the new way to do business.
LinkedIn Corp may be the highest-profile freemium story. The business-focused social network went public earlier this year and is valued at about $8 billion. This month, the company reported its first quarterly profit, while revenue more than doubled.
It is free to join LinkedIn, but the company charges for premium subscriptions. Revenue from paying members jumped 60 percent to $23.9 million in the second quarter.
Like LinkedIn, SurveyMonkey is profitable and growing quickly. It has 8.5 million users, up from 2.6 million when Chief Executive David Goldberg took over in 2009.
Goldberg credits some of this success to the freemium approach.
“It fundamentally changes the way you think about the business,” Goldberg said. “We have no salespeople. Our free customers do the marketing for us.”
Image by Mario Sundar