Freemium is a blend of “free” and “premium.” An app costs nothing to download and use at a basic level, and the developer earns money from optional purchases made inside the app. The model spread rapidly on mobile because app stores let anyone download an app instantly and for free, removing the upfront price that might stop a user from trying it, while still giving developers a way to be paid once a user is engaged.
Apple’s own developer documentation describes the model directly. In its guidance on App Store business models, Apple writes that “with freemium models, users pay nothing to download your app and are offered optional in-app purchases for premium features, additional content, subscriptions, or digital goods.” It adds that “freemium apps are accessible to all users, regardless of whether or not they choose to spend, and offer the option to pay to enhance or customize the experience,” and that the developer earns “revenue from the sales of in-app purchases within your app.”
Freemium sits among a small family of related models that Apple distinguishes. A free app may earn nothing or rely on advertising; a paid app charges once upfront for full functionality; a “paymium” app charges for the download and still offers in-app purchases; and a freemium app is free to download with optional in-app purchases layered on top. The distinction matters because each model interacts differently with the platform’s commission and with how users decide whether to install.
The model proved especially powerful for games. A free download brings in a very large audience, and a small fraction of highly engaged players, often called “whales,” spend heavily on consumable items such as extra lives, currency, or boosts. This long-tail revenue distribution, where most users pay nothing and a few pay a great deal, made freemium far more profitable at scale than charging a flat price that every user must accept before trying the game.
Freemium also drew criticism. Because revenue depends on getting users to keep spending, some apps lean on psychological pressure, artificial difficulty, or time-gates designed to push purchases, a pattern critics call “pay to win” or predatory monetization. Despite those concerns, freemium combined with in-app purchases became the default business model across the mobile ecosystem, underpinning a large share of the revenue described in the broader app economy.