It’s hard to resist the allure of free. When done right, the freemium business model can help drive massive traffic to companies’ websites, provide a “try before you buy” experience that overcomes user resistance to paying, and convert free users to paying customers. However, many companies fail at this strategy if customers anchor on free goods and can’t be dislodged. A new Journal of Marketing study examines how to extend product lines for maximum revenues. A research team assessed the sales of a scholarly publisher that offers free online PDFs of its book titles but charges a price for paperback versions. The team tested product extensions that included a premium e-book and hardback. Key findings include: Adding the hardback increased the paperback revenue by 8.9% and adding the e-book increased the paperback revenue by 21.5%.
Full Article: https://doi.org/10.1177%2F0022242918807170
Scholarly Insight: https://www.ama.org/2018/12/06/winning-the-freemium-to-premium-product-wars/