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The effect of free sampling strategies on freemium conversion rates

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  • Oliver Francis Koch

    (Darmstadt University of Technology)

  • Alexander Benlian

    (Darmstadt University of Technology)

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.

Suggested Citation

  • Oliver Francis Koch & Alexander Benlian, 2017. "The effect of free sampling strategies on freemium conversion rates," Electronic Markets, Springer;IIM University of St. Gallen, vol. 27(1), pages 67-76, February.
    • Handle: RePEc:spr:elmark:v:27:y:2017:i:1:d:10.1007_s12525-016-0236-z
    DOI: 10.1007/s12525-016-0236-z
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    9. Matti Mäntymäki & Sami Hyrynsalmi & Antti Koskenvoima, 2020. "How Do Small and Medium-Sized Game Companies Use Analytics? An Attention-Based View of Game Analytics," Information Systems Frontiers, Springer, vol. 22(5), pages 1163-1178, October.
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    12. Falko Lucht, 2019. "The Success of the Freemium Business Model. How Riot Games flourishes with a free to play game," Manager Journal, Faculty of Business and Administration, University of Bucharest, vol. 29(1), pages 114-124, December.
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    14. Naixin Zhu, 2023. "Dissertation on Applied Microeconomics of Freemium Pricing Strategies in Mobile App Market," Papers 2305.09479, arXiv.org.
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    18. Danckwerts, Sebastian & Meißner, Lasse & Krampe, Caspar, 2019. "Examining User Experience of Conversational Agents in Hedonic Digital Services – Antecedents and the Role of Psychological Ownership," SMR - Journal of Service Management Research, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 3(3), pages 111-125.
    19. Kang Li & Jingwei Zhang & Lunchuan Zhang, 2021. "Optimal Software Feature-Limited Freemium Model Design: A New Consumer Learning Theoretical Framework," Mathematics, MDPI, vol. 9(9), pages 1-24, April.

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