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Unlocking the Strategic Role of User Heterogeneity with Freemium Models

By Juthawan (Janice) Karnasuta-Thongborisute Ph.D. Candidate in Management Science at ESCP Business School in Paris, France. Tuesday, August 5, 2025, 12:00 to 13:00 pm Venue: Room 201 at Sasin School of Management or online via Zoom Register here to reserve your seat Abstract: This study investigates how freemium business models can serve as strategic choices for digital firms in attracting and engaging heterogeneous user segments. We find that compared to premium strategies, freemium strategies, by lowering barriers to entry and offering decoupled features, are more effective at attracting users with diverse preferences. In contrast, offerings with higher price points can also attract heterogeneous users as higher user commitment may catalyze peer spillover effects that broaden market appeal. Moreover, freemium strategies lead to higher user engagement. However, this effect weakens in the case where user preference ambiguity persists over time. This dynamic is especially pronounced for offerings that rely heavily on network externalities where they may face greater risk of getting locked out of the market. We also show that firm reputation could mitigate this risk through higher likelihood of user trials. Our findings contribute to research on network effects and digital engagement by elucidating the strategic role of freemium models in supporting digital scalability from a demand-side perspective. Managerially, we provide insight for digital firms in the design of revenue strategies that promote sustainable growth where end users can serve as strategic resources. Future projects – Janice’s ongoing research examines the international diffusion of digital platforms and its impact on host-country business dynamics and broader economic welfare, including local firm competitiveness, labor market conditions, productivity gain, and technological spillovers.   For more information please contact +66-2218-4000 ext. 84095 or researchseminar@sasin.edu.