Freemium represents an essential business model in the accelerating mobile applications industry. While Freemium models contribute more than 90% of the revenue generated in Google Play and Apple’s app store, extant research lacks to date a systematic typology. Therefore, this paper aims at developing a classification scheme for Freemium business models. Using theoretical sampling, we identified 40 apps from which we derived an empirically grounded typology comprising nine distinct Freemium types. We differentiated each type by two key themes, which are its premium revenue stream and the relationship between the free and premium offering. The developed typology contributes to a better understanding of the differentiating criteria of Freemium business models and enables risk-return considerations in the decision-making of app publishers. In addition, the typology provides a generalizable framework for different kinds of Freemium offerings. Finally, we developed three testable propositions from the typology which relate to the monetary advantage of certain Freemium types. These propositions give strategic advice on how to position existing Freemium offerings in quasi-monopolistic markets.
Deubener, Johannes; Velamuri, Vivek K.; and Schneckenberg, Dirk, "A TYPOLOGY OF FREEMIUM BUSINESS MODELS FOR MOBILE APPLICATIONS" (2016). Research Papers. 59.