Price Management on Global Digital Subscription Services Using Freemium Business Model

Abstract

E-commerce definitions allow us to understand the digital environment beyond a simplistic view of packaged products being delivered to one's home. Content, services, and experiences digitalization also became consumption options, having strong representatives such as Netflix, Spotify, and LinkedIn, among other digital services with revenue coming from recurring payments, here referred as digital subscription services (DSS). Freemium business model has gained prominence in recent years, although much of the literature considers it under a dualistic view (free vs. paid version), though there's no impediment to more than one paid version (levels). Taking advantage of the global reach, freemium DSSs usually have standardized purchase options (number of paid versions and benefits of each), turning the flexibility to set local prices fundamental to adjust the paid version(s) value perception according to the economic, market, and consumer expectations in each market. This chapter proposes price positioning strategies in global freemium DSSs, having Cutler and Sterne's conversion digital consumer lifecycle model in the background and potential scenarios in premium levels management based on the premise of price flexibility for local adaptations. Such proposals will allow global freemium services' managers to make price adjustments according to the analysis of the consumer distribution among service's paid versions, and to future studies to seek a possible quantification of the price change due to the asymmetry of consumers' distribution.