Freemium, Trial, No Trial, etc. How to price a service?
I am developing a tool for developers. I was inspired by pinboard.in - a bookmarking service which has no trial or free version and has signed up thousands of users for ~$11/year. I really like the simplicity of that model but I am concerned about conversion. I think a big part of Pinboards success is that it's relatively inexpensive. How do you determine the price and what sort of benefits come with offering a free trial vs. a freemium vs. a solely premium model?
Definitely. You're either going to spend $11/year or you won't.
As far as determining whether to do free trial or freemium, this is my current go-to article.
One comment: I think it's important, however, to separate the free trial/freemium issue from the pricing issue.
Think about free trial and freemium are acquisition models, not pricing models. They function as a medium to get people to pay for your service, not as the model for how much people will pay you and when.
When considering whether to do a freemium or free trial, my biggest advice is to consider that all of the time, resources, and marketing you do to get the freemium or free trial users add to your customer acquisition cost for paying users. Yes, more freemium and free trial users often lead to more paying users, but you have to make sure you have that balance.
In your situation, it sounds like you'll have to experiment a little bit with both. I.E. A relatively lower price point and no freemium or free trial versus a higher price point with free trial / freemium.
What type of tool is this? If it produces a lot of value for a developer, I'd recommend going the freemium/free trial route. And if it does produce a lot of value and the value correlates specifically with usage around a particular metric, I'd generally say you'd want to lean toward a freemium model over a free trial.
Hi Wes -
Thank you for your advice.
The tool extends upon the idea of a service like github gists making code snippets easier to access, edit, and share. In my experience as a developer, I have written a few tools for managing code snippets and use them on a daily basis.
We launched free trials recently, and it has tremendously increased sign ups and conversion. However, this is something we waited a long time before offering, as you may lose some considerable money in the first weeks. For us, we decided to build capital before doing this.
Ok - so wait an potentially make a trial available later. I like that idea.
There are many great articles about pricing. you can search here or at medium.
I rarely buy any product before using it, but the thing is, free trails don't convert in most cases because people don't value free stuff.
Therefore, if you can afford it, offer a free tier for your product that will push users to pay for it once they feel comfortable with your service.