My thoughts and explanations

The business model that is outrageous these days

Massive Open Online Courses(MOOC) are pretty common nowadays. Knowledge can be shunned easily without going to any formal institute and best of all in one’s own timing. One of the Most popular MOOC is EDX whose motto is “Free online courses from the world’s best universities”. I was following EDX from its beginning as it was basically founded by MIT and Harvard, two of the most prominent institute in the USA and also have collaboration with other universities. Initially, it offered courses completely free, but as days passed the introduced Verified courses for a small fee and today there are courses that are not actually free. But you will actually need to pay money for registering some course. This caught me thinking about their operating model. Isn’t that what we have seen all around us. This is a very popular business model among software company. It is called freemium model. It is basically a model where the service provider first provides you their service for free and once you get used to their service, they start to charge you.

This business model is very much common nowadays. I am not against this model nor do I back the model. I am just writing this blog because thinking about this model reminded me of a story. There is a tale in Bangladesh that,

When the British ruled Indian Subcontinent, When the introduced tea for the first time, No one was actually interested in tea. So they basically gave tea free to everyone for drinking. Then slowly tea started to become part of the daily life of the people. And then actually the British started to Charge for tea.

I don’t know about the authenticity of the story, but I heard it from many people. If any of the readers can verify the authenticity kindly let me know.

Let’s think about the Freemium model again. According to Businessdictionary :

Freemium is a business model that allows a consumer to receive basic services for free but requires them to pay for any service deemed to be premium. For instance, a cable provider may offer a customer free HBO for 2 weeks, but then require the customer to pay a fee for any program considered to be premium. Another example is computer software which offers a user basic use of the program, but requires a fee to access advanced features.

And according to Wikipedia:

Freemium is a pricing strategy by which a product or service (typically a digital offering or application such as software, media, games or web services) is provided free of charge, but money (premium) is charged for proprietary features, functionality, or virtual goods.The word “freemium” is a portmanteau neologism that was coined by Jarid Lukin in 2006.

I am not a student of Business studies, but still thinking about these things gets me interested and inspired. I personally think this model is a great idea for a business. Once you make your consumers addicted to your product you can charge as much as you want. After all, The value of a product is as much as the amount of money a consumer is ready to pay. And an addicted person will pay anything for their addiction.

Business Dictionary article: http://www.businessdictionary.com/definition/freemium.html#ixzz3qcWZJ1mX

Wikipedia article: https://en.wikipedia.org/wiki/Freemium

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