A popular business approach, particularly in technology, is freemium products. By offering freemium products, customers may be encouraged to pay for additional products later. Three companies that have adopted the freemium model are Costco, Epic Games, and Google.
Costco
Costco is famous for offering free samples. Why do they do this? Simply, it entices customers to try and buy new products. It is had incredible results, increasing sales by almost 2,000 percent. What is interesting about this strategy is that it is fairly unobtrusive. No salesperson is involved, besides a Costco employee offering the samples. Although untraditional, it is amazing that Costco is able to make as many sales as it does with this method.
Epic Games
Epic Games is the creator of Fortnite. Fortnite has gained massive adoption due to being free. Its has become profitable through addons like skins and DLC packs. On average, players of Fornite were found to have spent $84.67 on the game. This is more than what a typical game is priced at, which ranges from $60 to $70. By having a freemium model, Epic Games’ has made more money and gained more users compared to their competitors.
Perhaps the greatest exemplar of the freemium model is Google. They offer many free products: Google search, Google Docs, Google Drive, Google Slides, Gmail, Youtube, etc. Their revenue derives from ads. By having users use their products for free, they collect data and use it to provide targeted ads for businesses. Though this process might seem complicated, it has allowed Google to become one of the wealthiest companies today.
The idea
Clearly, the freemium model has proven to be a capable sales method. It almost automates sales: customers begin using a product because it is free, then they start paying. Moreover, it involves little to no sales staff. A customer essentially convinces themselves by interacting with the product on their own terms. This form of sales is no-pressure and reduces buyer’s remorse.
I really like how you cover a large variety of different business while looking at the different sales methods. This allows for us to realize that different types of models work in different types of business. I personally really enjoy the freemium model because it allows me to get a taste of what the product is like without fully committing to the purchase.
That’s super interesting about Costco’s free samples! Freemiums are a unique sales model but it can clearly be pretty effective. Interesting post.