Freemium vs Paid Strategy

Format: Decide on a pricing model for your product.

Decision framework:

Answer the following questions:

□ Is your target market large? (>1 million potential users)
□ Is the marginal cost of the product very low? (almost zero cost per additional user)
□ Does the product have network effects? (more users = more value)
□ Do users need to try it before they understand the value?

3-4 "yes" -> Freemium
0-2 "yes" -> Free trial or direct paid

Conversion rate reference:

• Freemium: 2-5% convert to paid (but high registration volume)
• Free trial: 15-25% convert to paid (but lower registration volume)

Exercise: Design a pricing plan for the following products:

1. AI translation tool
2. Project management app
3. Online course platform