Fremium is one of the more interesting new business models. Although the term is barely four years old, it is one of the most popular models for start-up organizations. Fred Wilson first articulated this term in 2006 this way:
“Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc., then offer premium priced value added services or an enhanced version of your service to your customer base.”
Freemium works extremely well on the web. An example would be the anti-virus software AVG – you can download the free version or if you would like more “premium” features you can pay for a premium version. AVG stays sustainable because there are enough premium users to support all the free users. Television is another, content is free for the viewer because it is supported by advertising. The important thing to realize is that free is relative – the product or service is free to one group because another group is covering the cost of the service.
Most Nonprofit Organizations are naturally using this model. They are supplying goods or services to one group for free – while being supported by donations or grants. This is a very important concept to understand. If you understand this, then you know that in reality if you want your organization to be sustainable you need to market to the people or organizations that are paying for your organization to supply free stuff. Your supporters really want to understand your mission. They want to hear stories how your organization helped in their given area. Give them the stories – this is how you will keep being able to “free stuff”.
Join us for our next Networking for Non-Profit Event September 30th!