The Ultimate Freemium Business: Tirupati

I have a very bad habit of looking at everything through the lens of a business model. Places of worship are absolutely the last place you want to try and rationalize a business model to. However, over the last several years I’ve had the chance to visit the insanely popular Tirupati temple located in Andhra Pradesh and started to think through its business model.

Like any other business, Tirupati offers various services depending on how much money you shell out, in this case a donation to the temple. And, like any other place of worship they also provide free prayer offerings. Tirupati also offers differentiated classes of service, like the airline industry does with its first, business and economy class segments.

The differentiated classes of VIP service is what probably brings in the bulk of the money. Like a freemium business 80-90% of the people visit the temple for free and the rest of the VIP attendees pay to keep the lights on and allow Tirupati to continue with its charity work. With each passing year that I have visited Tirupati I’ve noticed the lines getting longer and longer for the general admission prayer line and I get the sense it was designed that way.

Its better to have more and more people visit the temple because it increases the likelihood that a small percentage of the attendees will pay for VIP access to the temple in order to skip the long lines. Essentially the attendee has converted from the free product to the paid product. The product is the same but getting access to it has been made easier. The reality is that religions for 1000’s of years have had a freemium business model in place, its just in the last 100 years we have started applying it to other products and services.

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