The effect of free sampling strategies on freemium conversion rates
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Freemium business models, where companies offer a free basic and a value-enhanced paid version of a product, have become ubiquitous across software, games and a broad range of web services. Despite the many benefits of freemium, most firms suffer from too few premium subscribers (3–5 %), which challenges their profitability. Although free trials have helped improve premium conversions, research hitherto has paid little attention towards what works effectively. Therefore, we examine the effect of two common free trial strategies on consumers’ conversion likelihood: Freefirst, where consumers start in the free and then opt into a trial of the premium version and Premiumfirst, where things are experienced in reverse order. Based on a contest-based online experiment with 225 subjects, our analysis reveals that in contrast to Freefirst, Premiumfirst significantly increases conversion propensity and that this positive effect is greater when the premium and the free version are more similar.
KeywordsFreemium business models Premium conversion Free trial strategies Product value discrepancy Loss aversion Randomized online experiment
JEL Classification2.20.3 Experiment 3.080 Consumer behavior 3.120 E-Business 5.110 Services
The second author gratefully acknowledges financial support from the Werner-Jackstaedt-Foundation in Germany (Grant No. 010103/56300720).
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