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The effect of free sampling strategies on freemium conversion rates

Oliver Francis Koch () and Alexander Benlian
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Oliver Francis Koch: Darmstadt University of Technology
Alexander Benlian: Darmstadt University of Technology

Electronic Markets, 2017, vol. 27, issue 1, No 7, 67-76

Abstract: Abstract 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.

Keywords: Freemium business models; Premium conversion; Free trial strategies; Product value discrepancy; Loss aversion; Randomized online experiment (search for similar items in EconPapers)
Date: 2017
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