Risk-Free Offer Models: What’s the Difference Between Free Trials, Freemium and Money-Back Guarantee?
Companies and online service providers invest massive efforts to increase their user-base, acquire new customers and generate more revenue.
One of the most practical ways to achieve these goals is by presenting potential customers with risk-free offers.
Three common business models implement this strategy, and each has its own approach.
However, the message which they all covey to potential customers is identical: Give us a chance, you have nothing to lose!
Let’s dive into the details and see how each method works.
What is a Free Trial?
This model allows users to try out the service and all its features for evaluation purposes completely free of charge, during a limited period.
Some free trials require credit-card information (read why), while others do not.
What is Freemium?
The term ‘freemium,’ is a combination of the words: “free” and “premium.”
It’s a model in which web-based platforms offer free and paid versions of their services.
Users get access to some of the product, service, software program or mobile app’s basic features for free forever, with no time limit.
If the user wishes to use the premium or advanced features and get full functionality, he must upgrade his membership and pay for it.
What is a Money-Back Guarantee?
A money-back guarantee allows the buyer to get a refund on a purchase of a product or service within a set period (for example, 30 days from the time of purchase) if he is unsatisfied.
The Bottom Line
Free trials offer the best risk-free model from the consumer’s perspective.
Unlike freemium, trial offers usually provide complete access to the premium features of the service, and unlike money-back guarantees, they do not require upfront payment to use the product for some time.