Freemium, a popular business model in the digital economy, offers a basic product for free while charging for advanced features or value-added services. This pricing strategy enables platforms to attract a broad user base and then monetize through premium offerings. Customer characteristics and service price are important factors affecting customer choice behavior in such a model. Based on consumption stickiness, we consider a monopoly that provides value-added services by incorporating a multinomial logit model into a two-stage dynamic pricing model. First, we analyze the optimal pricing of value-added services under a normal sales scenario. We then consider optimal pricing during the marketing period under two strategies—level improvement for value-added services and quality reduction for a basic product—and analyze the applicability of each. The results show that increasing the value-added service level has a positive effect on the optimal price of value-added services, whereas reducing the basic product quality has no effect on the optimal price. Furthermore, the numerical simulation shows that when the depth of consumer stickiness is low, the optimal marketing strategy reduces the quality of the basic product, the price of value-added services should be higher than that in the normal sales period but lower than the price under the level-improvement strategy for value-added services; otherwise, improving the level of the value-added services becomes the optimal approach. This study provides a theoretical basis and decision support for product quality design and service pricing that applies to freemium platforms.
Liu et al. (Wed,) studied this question.
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