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Freemium business model: construct development and measurement validation

Hao-Chen Huang (Department of Wealth and Taxation Management, National Kaohsiung University of Applied Sciences, Kaohsiung City, Taiwan, ROC)

Internet Research

ISSN: 1066-2243

Article publication date: 6 June 2016

3058

Abstract

Purpose

In recent years, the freemium model is popular with online users in internet markets. Regarding operation, the characteristics of the freemium business model are the focus of all websites and software managers. However, research lacks the literature on the development of the dimensions of the freemium business model and validation of measurement. Hence, the purpose of this paper is to probe into the development of the dimensions of the freemium business model and validate the measurement.

Design/methodology/approach

First, by related literature and practical observations, this study reorganizes the characteristics of the freemium business model and develops dimensions and items of the freemium business model to design the items of scale. The development of scale is based on the procedures of standardized testing, including draft, expert consultation, and pretest and test analysis, in order to test the reliability and validity of the scale. This study treated online users as the questionnaire subjects and analyzed 1,016 valid questionnaires.

Findings

Regarding empirical analysis, confirmatory factor analysis is conducted to test the internal quality of the model, including composite reliability, convergent validity, and discriminant validity. According to the empirical result, the freemium business model can be divided into basic free tier, two-sided markets, revenue sharing, service convenience, and network effect, which are the key factors of users’ selection of freemium products or services. This study developed 25 items of scale for the freemium business model.

Originality/value

Finally, this study plans to develop a scale of the freemium business model, which can serve as an appropriate measurement tool to measure the freemium business model, as well as help websites and software developers to plan or execute the introduction of freemium products and services. Hence, it can develop and design products and services meeting the needs of online consumers. Website and software managers can adjust their products and services to satisfy online users’ needs.

Keywords

Acknowledgements

The author thanks Dr Jim Jansen and the anonymous reviewers for their helpful comments and suggestions. In addition, the author would like to thank the Ministry of Science and Technology of the Republic of China, Taiwan, for financially supporting this research under Contract No. MOST103-2410-H-151-024.

Citation

Huang, H.-C. (2016), "Freemium business model: construct development and measurement validation", Internet Research, Vol. 26 No. 3, pp. 604-625. https://doi.org/10.1108/IntR-03-2014-0064

Publisher

:

Emerald Group Publishing Limited

Copyright © 2016, Emerald Group Publishing Limited

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