Final answer:
Mailchimp's freemium pricing model advantages include a wide user base and free trials, while disadvantages involve lower conversion rates from free to paid users. Mailchimp targets different business sizes, with small businesses likely using the free service and larger ones opting for premium features.
Step-by-step explanation:
The freemium pricing model, as used by Mailchimp, entails offering a basic product or service for free while charging for advanced features. Mailchimp targets a variety of businesses, both small and large, with its tiered pricing strategy. The advantages of this pricing model include attracting a large user base and allowing users to test the service without financial commitment.
Among the benefits are increased brand exposure and the potential for higher customer conversion rates. Small businesses or startups might be particularly drawn to the free tier, while larger enterprises may opt for premium options.
However, the disadvantages include the potential for a lower conversion rate to paid services and reliance on a smaller segment of paying customers to support the majority who use the free option. Companies utilizing freemium models must balance resources between maintaining the free service and adding value to paid tiers to encourage upgrades.
Some other companies that use a freemium model for business customers include Dropbox and Slack, which also offer a free basic service with the option to upgrade for additional features. Like Mailchimp, these companies attract a diverse range of businesses with their accessible entry-level services and provide scalable solutions as those businesses grow.