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What is Freemium (Business Model Pattern)?

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Final answer:

The freemium business model pattern offers a basic version of a product or service for free, while charging for additional features. Spotify is an example of a company that uses the freemium model in the music streaming industry.

Step-by-step explanation:

The freemium business model pattern is a pricing strategy that offers a basic version of a product or service for free, while charging for additional features, functionality, or premium content. It is commonly used in the software and digital industries, where users can access a basic version of an app or online platform for free, but can upgrade to a paid version for more advanced features or content.

For example, Spotify offers a free version of its music streaming service with ads and limited features, but users can upgrade to a premium subscription to eliminate ads, access higher sound quality, and have offline listening capabilities.

Freemium models can be effective in attracting a large user base and generating revenue through upselling or cross-selling premium offerings. However, it requires careful consideration of pricing, value proposition, and balancing between free and paid features to ensure profitability.

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