Can A Free Product Make Money?

Offering “freemium” products can be a smart way to acquire customers and build a lucrative business. But it’s not the right move for every company. 

- Adam Bornstein

Q I’m building an app, and I want to try a freemium model. Is this a successful strategy, or am I setting myself up for failure? —FABIAN, SYDNEY, AUSTRALIA

FABIAN, you’re facing one of the biggest headaches of the digital age. Turn back the clock 30 years, and the idea of giving away your product for free was almost unheard of. Today it’s a staple business model, used in some form by everyone from Drop box to The New York Times to Match.com.

So first, let’s define the options. The paid model is simple. If a customer wants to use your product or service, they must buy. The freemium model has several variations. You can offer free trials for a period of time, or offer an entire product or service for free while selling add-ons or upgrades.