2
10 Comments

Pricing Plans Poll: Free Plan vs Free Trial vs Paid Only

Hey folks, I'm having a hard time deciding between having a free plan, a free trial, or just sticking to paid plans only.

In my particular case, I have a service that can create and manage virtual hosts for you. So if you for instance want to programmatically give your users their own subdomains, or handle custom domains for them, it can automate that.

It has three potential modes:

  1. Connecting to your server and managing your virtual hosts there. No bandwidth or rate limits, because it runs on your hardware.
  2. It manages them on a server that multiple users share, so bandwidth and requests/second are rate limited - but it's cheap.
  3. It can create a dedicated server for one user and manage the vhosts there. No bandwidth or request rate limits, but costs more.

So initially I thought about having #1 be free (it's sort of self hosted?), #2 being the value plan, and #3 being the business plan.

I'm really worried about supporting free users, though. I'm also not sure that #1 is the least valuable. For some businesses I could actually see that being the most valuable for a number of reasons.

I'd really appreciate any thoughts or experiences you've had on this!

Thanks,

What are the best pricing plan models?
  1. Have a free plan
  2. Have a free trial, no free plan
  3. Have a free trial for paid plans AND a free plan
  4. Only offer paid plans
Vote
  1. 3

    Freemium is an acquisition strategy, not a conversion strategy, and an expensive one, at that. It's not bad, just expensive, so you have to plan for that. If you're a team of 1 without funding to grow, support from free users can quickly grow to consume all your time for potentially little value. It's especially risky if free users consume resources that directly affect your pocketbook, since you can go bankrupt through "success."

    Freemium really shines where your product is viral in some way and the more users you have using your free services, the more people who might pay that they will spread to. For example, SavvyCal could benefit from going Freemium, since the more people using it, the more people will see the SavvyCal widget when they schedule with someone using it, and the more users will have SavvyCal top-of-mind when they need scheduling software.

    If your app isn't viral, maybe skip Freemium and stick with a free trial or maybe a generous money-back guarantee. It's safer, more respectful of your time, and ultimately more respectful of your customers: if they're not "paying" you in some way, whether money, advertising, etc. you have less incentive to support them going forward, and their choice of your service is riskier.

    1. 1

      That's a really good take on it, I hadn't been directly thinking about it as acquisition vs conversion but you're right. I don't see my product being viral in any real way - it doesn't improve when more people use it or if you get your friends on board. So it sounds like having a fully free plan is not worthwhile for me.

  2. 3

    Interesting service. I agree that #1 is too valuable as a free option. There is little incentive for someone to get off the free plan unless they get big. Majority of sites don't get big enough for you to really turn this into a money maker. So I'd either:

    A) Offer a free service level like #1, but peel back some of the options that are enticing and make a large % of free users really desire to move up to a paid level. Or...

    B) Go right into a free trial, no free plan but make the trial lengthy or give your users a lot of extra value / quick wins during their trial so they have no choice but to convert to paid.

    Separately, this service sounds very interesting to a project I have going. I'd be interested in using your service. Can you DM me some info about it?

    1. 1

      Thanks for the insight, that's along the lines I've been thinking as well. Especially since the bring-your-own-server option might actually be the most valuable plan for some people because it lets them keep everything in-house, which can be a big deal for some companies. A decent length trial without requiring payment info would be a good idea for that plan.

      I'd love to send you some info, I was just trying to avoid self promotion on here. I don't think Indiehackers has DMs yet, let me know of the best way to get in touch, or you can email me at [email protected] I also have an early landing page up at approximated.app, though pricing plans are likely to change. I'm really interested to hear what you're building, too!

  3. 2

    I think the rest of the comments are very accurate, at the same time I think a limited free plan is also a good option.

    Someone needing to manage vhosts with an external service will probably need to manage a lot of them on the short term, so limiting the number of vhosts looks like a good starting point to get users and conversions soon later.

    Your product has a relatively high integration cost, so when someone uses your service, I think it will be difficult for them to switch to a different one.

    First users are hard to get, and to receive good feedback and ideas you will need a lot of them. I don't think there is a big difference between free and paid user feedback.

    Support can burn your spirit but it gives you very important information about what's not clear enough and what to improve.

    It's also subjective, but as a developer I think most of devs, devops and sysadmins like to try new cool things like your service and they move a lot by word of mouth, so if you can have as many as possible using it, while you keep your cost per user small, it could be a good long term plan.

    Well, that's just my opinion.
    Congratulations, I really like your product.

    1. 1

      Thanks for such a thoughtful response, what you're saying makes a lot of sense.

      I'm leaning really heavily towards having everything be paid, with a month-long free trial (no credit card required up front). Also thinking that I'll setup some automation, so that if they haven't created vhosts in over 2 weeks while on trial, I'll email to remind them and offer a trial extension.

      You're definitely right about devs. I'm a developer, and I love trying new tools like this too. Requiring payment method up front kills that spontaneous enthusiasm to just give it a shot. Maybe later on, if it gets any tractions, I'll still offer the free trial but require a payment method up front to filter out extra tire kickers.

      One of my biggest problems with my current model is that the lowest operational cost for me is the self-serve version where it connects to their nginx server, but that's also the most work for the user. It adds extra steps (add an SSH key), and has more potential points of failure (they have some existing config that causes issues for example).

      But the dedicated server version costs me real money per user, so at this early stage I don't think I should offer a free trial on those plans, because I could easily lose money. I'm leaning further and further away from a shared (with other users) plan, because that requires a whole different suite of features for making sure one user's vhosts don't interfere with another's (attempted duplicates/verifying domains, request and bandwidth ratelimits, etc.).

      Any thoughts on this would be really, really appreciated!

  4. 2

    Hey @Carter, I totally understand your dilemma and coincidentally I wrote an extensive post about various SaaS pricing models and which one to pick for your business. Hope it helps!

  5. 2

    61%?! I didn't know that I was in such good company!

  6. 2

    Hey @Carter Looks like more than 60% say have a free trial and no free plan. A few reasons why I vote for it too.

    1. You get to know the real value of the product only when people start opening their wallets. Initially offering the free plan might seem like an easy way to sign up but it starts to act against the revenue goal.

    2. The more free users you have, the more support/ maintenance you will need to provide without making money on them. It's opportunity cost, would you spend time supporting them or rather spending the same time on marketing getting new paid users or improving the product?

    3. Paid and trial users tend to be more supportive and provide better feedback on the product.

  7. 2

    Don't offer free plans. I did a free plan with a previous saas project of mine which scaled to 3k users and support was a real pain.

    Do a 7 or 14 day free trial instead and focus on serving paying customers. They will do the marketing for you if you treat them exceptionally well.

Recommended Posts