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6 Comments

Free vs Charging

Is there are advice or examples of creating a product and not charging for it to get a lot of users, then switching over to a paid plan (either paid only or a free tier with paid options)?

Does anyone have experience with this or advice? Is this a good strategy?

on August 26, 2019
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    The more users you have the more difficult it is to change (the product, pricing, etc.) without a big blow back. If you plan a free product and set a price later on, I would advise to go with "time-limited offer", "special launch discount", ... in order to set expectations.

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      Yeah I can see that. I'm thinking a "50% first year discount" would be a good way to handle it.

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    At my 16-year-old SaaS business, we've been through multiple iterations of pricing. My suggestions:

    • create the product for the high end of your chosen market segment
    • and charge them, more than feels initially comfortable. You want to start with the folks who have the most pain (i.e. willing to pay more).
    • you can create lower-priced offerings over time once you identify the major use cases and market segments where your product resonates. Don't cannibalize your high-price clients unless competition forces you to.
    • BUT: it's even better if you can start pricing high and then identify more valuable use cases/customer segments and enhance the product over time. This lets you raise prices.
    • freemium can get you users, but in general their feedback is less useful for product direction. Also, free users tend to require more support. Upgrade % tends to be very low, and will likely approach 0 in the limit. I would only consider freemium as part of a marketing campaign to raise awareness in the target (non-free) demographic. Be sure to plan for real $ and time spent supporting free. It may end up being more cost-effective to spend that time and money on other customer acquisition strategies.

    Best suggestion is build for a niche where people need a solution and charge them for it out of the gate.

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      That's good info- It's difficult to charge higher at the risk of not getting any customers, but I agree that's probably the right way to do it.

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    I think you should only make a product free if you plan to monetize it via ads/affiliate links/etc., i.e. not by charging the users. You can add optional paid features though. But I don't recommend changing the product from free to paid overnight, better give discounts to the first users like @smirolo suggested. You can also say the the product is free forever for those who joined before the paid plan, but it does not make a lot of sense, in my opinion.

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      Yeah that makes sense. I don't think I'd do a "free forever" plan as an Indie Hacker. I'm trying to figure out the best way to handle this. I'm guessing a "50% first year discount" or something like that would make sense.