FreedomPop, a Los Angeles-based startup, has been successfully growing and expanding their business in recent months, and with their business plan, it’s easy to see why.
The new mobile service provider offers free mobile services to their users, which has allowed them to attract their rather impressive one million customers since their launch in 2012 . FreedomPop’s business model is fairly simple, and it’s this simplicity that has allowed them to attract their customers.
A FreedomPop plan requires the user to use a FreedomPop phone, which is often a refurbished phone from Samsung or HTC, or they can register an existing Sprint phone to the FreedomPop network . Once the phone has been registered, the new user is given 500 MB of data, 200 voice minutes, and 500 text messages a month, completely free . As long as users stay under these limits each month, they won’t have to pay a cent to FreedomPop. However, if users wish to expand their monthly limits, they can pay 2 cents per megabyte of data, 1 cent for every voice minute or text message, or a flat $20 rate per month for unlimited data, minutes, and texts .
In addition to this “pay as you go” plan, FreedomPop also offers a wide variety of extra features for various monthly subscription fees. Features such as data rollover (carry over your unused data, minutes, and texts from month to month), anonymous browsing on your phone, insurance on lost or damaged phones, and the ability to add international numbers to your phone, are all available to paying users. Each of these features may be purchased “a la carte”, with prices ranging from $3 to $10 a month . FreedomPop says that the average paying customer uses a little over two of these features each month, generating roughly $14-15 a month in revenue. These paying customers balance out those who only use FreedomPop’s free services, allowing the company to bring in an estimated $50 million in revenue this year .
So, how is FreedomPop able to offer these services at the prices that they do? Rather than paying for their own infrastructure and network, FreedomPop partners with providers like Sprint in the US, buying network capacity from them wholesale . FreedomPop is able to use this to keep their costs down while offering competitive and desired functionality to their customers.
In the coming months, FreedomPop is still looking to grow. They recently raised $59 million in funding from US and European investors, and are finalizing plans to expand into Southeast Asia . With all these developments, Freedompop is certainly a company to keep an eye on.