New businesses are giving away their products and services for free to try and build a customer base. In mobile market, the situation is more or less the same, lot of new businesses are following in the footsteps of successful companies such as TVB fun, Whatsapp, Dropbox, skype by giving away their products and services free to build a customer base.

But this freemium strategy often takes a long time to work, and can be tough to pull off. We have reviewed some of them, the "freemium" strategy is turning out to be a costly trap, leaving them with higher operating costs and thousands of freeloaders.

• Limit free offerings to avoid cannibalizing your paid customers. Expect your free-to-paid conversion rate to be less than 5%.
• Promote both free and paid offerings, rather than focus just on acquiring paid users.
• Create an incentive for free users to refer their friends to your service or product.
• Clearly distinguish between free and paid plans, so users can see value in paying for more.
• Create a natural progression from free-to-paid features, such as the option to buy extra storage space on a cloud service once a user runs out of free space.