Aim:  The aim of this study is to investigate how the “Freemium”                business model works in ArcMage AB and explore what challenges will ArcMage AB as an open-source software industry face when running the “Freemium” business model. Method: A case study was adopted, and a qualitative research and face-to-face interview were used to collect the fundamental data. We use simple sentence and lots of figures to show what the “Freemium” is and what we are find to make the readers’ understanding easier. Result & Conclusions: The results exhibit that ArcMage AB is run following all 9 blocks of the “Freemium” business model. The value proposition and customer relationship are the most challenging for the open-source software industry. Suggestions for future research: Only adopting one case and one interview in the research is the main limitation. Moreover, the limited sample size limited the research in some generalisations. It is difficult to use only one case to represent the whole situation of the open-source software industry. Furthermore, a larger sample size adopted in the research can increase the reliability of the researcher’s generalization. Contribution of the thesis: This research can be regarded as a guideline to the businessman who wants to build an open-source software company in order to avoid the weakness and threats, and take the opportunities.