Freemium or not?
https://timeturtle.app
Hi fellow indie hackers,
For my app https://timeturtle.app I went with a competitive price, partly because this is about the price that I'd be willing to spend on an app like this. However, it means that I (think that I) cannot afford to lose paying users to a free account. And to be honest, I am reluctant to offer a crippled version of my app while I put so much love in it :)
So I was wondering what your experience is with freeimum vs non-freemium models. I'm sure that having a free account attracts users, but how many of these really become paying costumers?
Thanks!
Hi Almar, Corrine from Indicative here! When we first started out we offered only paid plans, but we realized as a startup in a competitive market, we wanted to showcase our product and the unique features we offer. So, we introduced our Freemium plan and it has been a huge success! We not only have customers on both our free and paid plans, but we have a lot of free customers converting to our paid! For Indicative, offering a free plan helped us grow our business!
Thanks for sharing your experience! Our products are not exactly in the same price range, but it's inspiring nonetheless :)
It's becoming clear to me that the exposure that a free plan provides is very valuable - I am now starting to get aware how hard it is to get exposure ...
The comments of @troychristmas and @alchemist gave me more insight, thanks! Let me try to write it down in terms of costs and benefits.
Benefits:
Costs:
I think that the trick is to draw the line between free and paid content/features in a way to get a good balance between costs and benefits. I suppose that this is easier when you sell content: people who like the free content may want more. When selling an app, you'll have to package the free version up in a way that it does not feel crippled (or you may turn users down), though it should not feel complete, otherwise no one will convert to the paid version. This is a nasty trade-off ... ideas?
I don't know about the 3rd party services you're using, but worrying about server load sounds kind of nuts, IMO. Based on my load testing experiments, a $5/month DO droplet can handle about 10,000x the traffic I'm currently getting.
That would pay for absurd amounts of hardware.
Yeah, server load is probably not the main issue :D What I mean is if 1% of your users are paying, and your pricing is low, you need a lot of users, and then the numbers may add up, especially if you scale further.
For some 3d party services (e.g. Auth0) the costs scale with the number of users. The costs are low, but again, if the ration of paid/unpaid is skewed and your income per paid user low, its something to keep in mind.
Using Auth0 can definitely be a problem (though they're nowhere near as crazy in that regard as they used to be).
Still, I think this is scalability arrogance. Plenty of Fish, Stack Overflow and many others (including Facebook in the early days before taking VC) scaled just fine while supported 100% on ads. And that was on slower, more expensive 2010 hardware!
Is scaling faster than any of those companies a real risk to worry about? If that happened, would you be unable to limit the features or desirability of the free plan or profit from the massive amounts of traffic?
If I could have 1 million free users for an app like yours tomorrow, I'd take them in a heartbeat.
Good points. So what would your advice be? To always have a free plan, because the #users is top priotity, and if you run into problems because you have a huge amount of free users that you cannot support off the paying users, then you limit the free plan some more?
I don't think a free plan is always a good idea. It's a trade-off that's good in some cases and bad in others.
My advice would be to COMPLETELY stop worrying about problems that stem from having a huge number of users. It's kind of like being worried about posting a YouTube video because it might make you more famous than Taylor Swift and make your life inconvenient when you're in public.
Just be ready to support 10x the number of users you have now and delay worrying about supporting millions until it's actually a realistic possibility.
Also think of customer service burden of free users at a ratio of 10 to 1. Is there enough money in paid users to support that?
In my experience, freemium works well with higher-priced items. My site isn't that expensive, but $21/month is on the higher end for a coding screencast site. The free content helps me get traction with a broader group of people who wouldn't pay that so that those who are willing to pay that can find me.
If I were doing one-off sales or just charging $5-10/month, then I probably wouldn't make it freemium.
About 5% of my free signups have converted to paid, or about 20% of the visitors in any given week (since many free signups never really engage much with the content).
Something I learned today: the endowment effect: the perceived value of a thing is higher if you already own/use it. This effect helps people transition from a free plan to a paid plan. Though the effect also applies to time-limited trials.