Freemium vs Free Trial: Which One Wins?
Hey indiehackers 👋
I just wanted to share an experiment I made with pricing while building seomatic.ai, a no-code tool for programmatic SEO.
For more context, I added a paywall from day-1 during 6 months and started to roll out a free tier that lasted 3 months. Here are my takeways from this experience:
Free Trial
Pros
- More qualified leads
- More conversion (6 out of 10)
- More customers interactions and conversations (=better features roadmap)
Cons
- A lot of Free trial abuse
- Less user signups
- Inactive customers who may ask for refunds (avoidable if you have an activity reminder email)
Freemium
Pros
- More user signups (went from 200 users to 1k users in a month)
- Word of mouth + more affiliates who can try the app (= more traffic)
- No more abuse and less customers support (I thought I would be overwhelmed by customer support interactions)
Cons
- Less conversion (1-2% conversion)
- Building features to convert users instead of valuable features for actual customers
- More ressources usage
My point is not saying that one is better than the other but just to write down my pros and cons so it might help someone to decide.
The main reason for switching back to Free Trial is that my app consumes a lot of ressources (i.e. creating 1000's of SEO pages at scale) and I wanted to save those ressources for my actual customers. Also, shipping more valuable features instead of features to nudge users to paid plans was not my thing!
I would recommend to any indie hacker to go with Free Trial first. Having a Free Tier when you start won't help you get the right signals for market validation.
I'm still open to try Freemium again once I figure out scalability and reach a market threshold.
Who is building a successful product with Freemium and can share their experience? Happy to hear about that!
In freemium model there is a risk that they may not see the value in paying for additional features. Additionally, it can be difficult to convert free users to paying users, which can affect revenue.
What are the pros and cons of using a free trial versus a freemium model when launching a new product? Can you provide an example of a successful product that uses the freemium model?
Thanks for sharing this! Still at pre-signup phase of my side-project but it's great to start thinking about this now.
It's mostly about the speed of the results/value that your solution provides. Let me explain, a tool like marketee.io (my app) creates content, so the result that you get out of it is instant but when it comes to SEO the result might take longer to show and thus the actual value of your product is realized much later, but once people hook on it they can't leave. So for instant result, free trials work like a charm, but for long-tenure results, you need to wait and convert people who are using the product regularly, unfortunately, there's no other way.
Hey Minh,
I'm not a fan of either to be honest - I wrote about this a little while back: https://www.indiehackers.com/post/why-freemium-free-trials-are-a-terrible-growth-strategy-for-startups-937542e2a1
good post with good clearance about Free trial and freemium.
Pricing is a subject which is so complex, good to see that some people are open to speak about it. For my app (whisperize.me) I went for the freemium, considering that there is less friction in just texting my bot to get started than registering a credit card. Still, as you point out the conversion is very low (got 3 paying users for 160 total users). So it definitely depend what are the goals - number of users of quality of the users (meaning these who are able to pay). And as you said- there is no good or bad answer there, just different approach. But damn, pricing is such a complexe subject - so interesting and psychology related. Thanks for sharing your feedback ✌️
Thanks for sharing! Agree that if does not make sense for your business to put a paywall here :)
You are correct about the free trial and freemium model. Thanks for sharing this!
Thanks for the post at certain point even i was confused, but after careful evaluation i went forward with freemium model has it will have better impact on my product then free trial. After reading your post I felt i have made good decision 😀
what are you building and what makes freemium more suitable for your product? just curious :)
Here's my story - In my past two startups I realized that getting users and traffic was more important than monetization and both failed before I could figure out how to monetize, So I had close one and running another has charity. In my next startup, xofile.com, I planned to charge on day 1 by offering a free 14-day trial and launched it to a closed beta group, which was disaster as people's trials ended before they reached their goals. Then, I came across a book called product-led growth by Wes Bush, where Wes Bush clearly explained which model would suit your type of product. And mine with no-doubt falls into the freemium category as I don't use any expensive API resources and users who register should get a possible outcome before upgrading. Thus planned to move to ahead with freemium, coming back to your post when saw the benefits you wrote it really added more confidence to my decision. Getting user signups & word of mouth, etc is what I exactly want and now products are carefully designed to let users only receive side dishes for free and have to pay for the main course.
I am researching product pricing myself. Thanks for your post. I'd appreciate your participation in this poll.
Answer your poll as well.
Just answered your poll, good luck finding your sweat pricing spot!