Beware “Freemium” Applications

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Products are made to make money and “free” ones are no exception. In fact, a huge industry has formed around everything free. This new price model, sometimes dubbed “freemium” or “free-to-play,” is about giving away a few basic features in the hopes of influencing an individual to purchase an upgrade or extension. The tactic is most associated with mobile games, an area in which the “free” Candy Crush can make over a billion dollars in just a year. That and similar successes have made the model a standard, and it has been adapted everywhere from newspapers to cloud storage. But all of this money makes one wonder: if something is being offered for free, why are so many opting to pay the price?

It is easy to get misconceptions about the model from the get-go, especially given the misleading name. One would assume there must be a full product being offered for free. In practice, however, the free offering may only be a sample, excluding crucial parts that one must pay to access. Other times the premium elements simply make the game easier or add in cosmetic features. When we hear the word free in this context, we should always be wondering what exactly it means.

It is essential to understand that the “free” model is an advertising strategy, designed to make a product known and used among the wider population. Companies are careful about how much of their user base turns to “premium,” trying to make sure there are enough people using the “free” features to let the product generate buzz. That does not mean the free product is not a good service in itself or that a premium price always must be paid. It does mean there will always be a good number of features waiting to be bought, and you may find yourself more and more willing to pay for them.

Of course, there’s nothing wrong with sustaining a company by having a portion of the user base pay for extra elements. What is concerning about the freemium model is how one-sided this spending tends to be, with as few as .15 percent of users accounting for half the profits in the mobile game industry. These high-volume users, sometimes referred to as “whales,” can spend hundreds in only small purchases. At the same time, many mobile games are designed to encourage such small spending, with levels that often become so hard that the extra features become practically required to beat it. This is a potent recipe for addiction that can have real financial consequences. The huge bills that accumulate may be hard to fully grasp until they finally start to hit you.

When using freemium games it is important that the buyer beware. The tendency for many to spend exorbitant prices on games like these should serve as a warning for what can happen without careful planning. When paying is brought down to the simple click of a button, it is easy to lose track of just how many times you pushed it. Being conscious of this problem is the least that a responsible consumer can do to keep their frugality while they play a freemium game. Keeping a handy list of past purchases can also help.

As it appears likely that this model will become increasingly common on the internet, it becomes more important to prepare ourselves for it. These pricing strategies aren’t wrong, but they do have the potential to make us lose track of our frugality in our bid to advance to the next level. Consumers should take “freemium” for what it is — not a gift, but another way we can purchase the content we want. The only question is, how much are we willing to pay?

s.williams@dailyutahchronicle.com

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