Premium vs freemium

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What is premium?

Premium is the concept of charging an elevated price for a good. There may be additional features that help differentiate the good from others and in turn, allow a company to be able to get customers to pay a high price than other firms. The premium offerings may be better than a more general product offering. 

What is freemium?

Freemium is a business model that describes combining both elements of premium and free together. A base product is provided for free, and them additional features are charged for (i.e., free + premium = freemium).

The freemium business model is common in apps. An initial base app can often be downloaded without any charge, and then additional fees are charged to unlock more premium features. While a majority of users may use the app for free, the profit is made by the proportion of users that pay for the additional features.

Difference between premium and freemium

The key distinction between premium and freemium is that there is a group of users in the freemium model that use the product for no charge. You have to bear in mind such users when pricing the product – ensuring that the substudy given to free users is outweighed by eh revenue generated by those users that you are able to upsell to buy more premium features. 

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