Instead of going to market with a high price, companies using a penetration pricing strategy have a low-priced solution in order to capture as much market share as possible.
For example, expense management software Expensify uses a list of armenia consumer email penetration pricing model in combination with product-led growth. Their low price draws initial users, and then more users within a company will adopt the tool due to its functionality.
Penetration pricing only works if the solution can achieve economies of scale since high volume has to compensate for the low per-unit price. Or, penetration pricing can be used only as part of the go-to-market strategy in hopes of gaining brand loyalty that’ll last when the price eventually rises.
3. Freemium
Freemium is a portmanteau of “free” and “premium,” and a freemium business model involves offering a free version of your product or service and then upselling users into a paid version.
The music streaming platform Spotify uses this model, offering a free version that allows users to listen to music, but if they want to download files to listen to offline, skip songs unlimitedly or adjust their audio quality, they have to upgrade to a paid account.
Freemium can be a part of your go-to-market, or it can be used to break into new markets or introduce new products.
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