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Why Freemium Model Does Not Work in Nigeria

Why Freemium Model Does Not Work in Nigeria

I maintain that your chances of hitting gold running a business venture in Nigeria are higher when your products and services are poised as a pain reliever than a multivitamin, and where such pains have become so afflictive the affected persons are already trying to mollify the effects through improvisations and makeshift arrangements, then your “working solution” almost instantly becomes a success.

For clarity sake the freemium model, a portmanteau word coined from “free” and “premium” is a business model where basic services are provided free of charge to the customer while the more advanced features must be paid for. As you can guess, this model is an easy go-to for entrepreneurs because of its inherent tendencies to attract large pool of interests and considerations while serving as a lure for the advanced features – the actual revenue generator. But the real question is: how efficient is this model ultimately in generating revenue for Nigerian businesses?

The Nigerian economy and consequently its business scape is quite an interesting one to observe, duplicitous as her ideals are a thousand miles at variance with her actual reality. Nigeria according to the World Poverty Clock has 91.16 million citizens living below a dollar a day which implies that virtually half of the population lives in extreme poverty, and of the remaining half above the poverty line, a huge number erstwhile regarded as the “middle class” currently suffers purchasing power erosion due to economic policies and government inefficiencies, meaning that having even a “basic offering” is currently a luxury to about 70% of the Nigerian population.

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Hinging on the above, offering basic services free of charge in hope to charge premium on the advanced services in Nigeria could therefore be tantamount to frustration and ultimately, death of such business. Not that the freemium model doesn’t work, at least it could help generate tons of leads and traffic to keep you in the high (for those who enjoy the busyness side of things) but the herculean task will be converting the leads (many of which came because of the “free-ness” of the solution than of the actual solution) to purchase the advanced features, a percentage usually few and disappointing in comparison with the leads generated. 

Typically, those who need and can afford the advanced features usually don’t need the bait of the free basic services but will rather seek other validative methods such as testimonials or referrals. On the other hand, those who rush at the free basic services many times are contented as it largely is a luxury for them, the real problem then starts when such business needs to cover the costs for the free basic services offered at the expense of low patronage of the advanced features. 

Of course, the story is not always gloom using a freemium model in Nigeria, data collection from the free basic services could become a huge goldmine in itself. Also the business charging for the advance features could partner with a not-for-profit providing the basic services freely as a way to absolve the former of the costs. Ultimately, having being as a consultant and advisor to many businesses in Nigeria, it is a lot better, safer for a business to offer their paid services and then add the free services later as a strategy to keep its paying customers. I guess we’d call that a “Premifree” business model. 

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