What Makes MNC's B2B Freemium Model for Start-Ups Work in the Emerging Markets?: Insights From India

Abstract

The primary objective of this work is to investigate the perspective of startups about the Freemium model. MNC's would like to catch hold of startups that are likely to scale up and are global in nature. But startups lack the financial muscle to invest and that's where the freemium models fit in. MNC's use of B2B on firms in host countries is also understudies. The extant literature on Freemium is focusing on consumers, not B2B. The B2B Freemium is an under-explored area of research. This paper is trying to fill these gaps. Getting a demand-side perspective would give a more balanced view of how companies compete through their business models and what changes can be brought in to better them. For this, the mixed methodology is used. The 45 SMEs/startups are interviewed to understand their pain points. The findings from primary research are substantiated by using the Interpretive Structural Modelling approach to get an idea of the impact of the factor's interaction with one another. The six important parameters are identified. These parameters are – the need for freemium, customer perceived price value, customer satisfaction, the promise of good user experience, customer conversion and adoption, and customer perceived premium fit. It is found that customer satisfaction and the promise of a good user experience are the most important factors among all for the success of the freemium model.