Thoughts on Freemium for B2B SaaS
At wespond (https://www.wespond.app), we're building a leadership tool that helps teams achieve more in today's workplace.
Currently, we charge 250€/month/team and are considering pivoting towards a freemium model. In the essence it comes down to the following consideration:
"It's easier to convince someone to pay for your product than to convince someone who uses it for free, to convert to paying"
Anyone has experiences with freemium in the b2b segment?
Opinions and feedback is highly appreciated. Have a great week guys 🚀
While generally speaking I'm a big fan of freemium, my sense is, based on your website, that it might not be the right model here. My thinking:
1. It sounds like there is a considerable onboarding process
Freemium is great when the onboarding process is completely self-service; I can access the product and get value without ever having to talk to someone. However, in your case it sounds like it requires onboarding, and therefore raises the overall cost delivering the product. This makes it harder to utilize Freemium
2. The frequency of use
If the product is one that is frequently used, i.e. has a daily or intra-day use case, freemium can work very well because there are multiple opportunities to upsell to the paid offering. With wespond, it looks like the product is used weekly so those selling opportunities are fewer and farther between
3. Network effects
If the product gets better the more people use it, then it freemium does well as it lowers the risk to sharing and adoption. wespond looks like it's meant to be used within established teams and while certainly happy users will talk to other potential users, the product doesn't appear to generate more value for existing teams if new teams join.
Just my thoughts based on a quick look over the site. Hope this helps!
P.S. For the sake of the above, I took freemium to mean excluding free trials. I almost always think free trials are a good idea :)
Great advise! I appreciate you taking the time to have a look at our work. I agree with the points you made, especially the fact that the product itself combined with the market we focus on does not allow for viral growth through network effects and freemium therefore would not be a feasible driver for this model. Again, thanks for taking the time - it is highly appreciated :)
How many customers do you currently have and what is the average price per customer?
Around 30 users @ 249€/month
You have 30 teams or 30 users?
Teams, luckily! :)
You guys seem like you are in a great spot. Do you have high churn? What's the average number of users/team? How's your NPS?
I'm really surprised that you're thinking about introducing a freemium model. What's the goal?
I'd be extremely weary about introducing a new business model when you seem to have a business model that you've already proven can acquire customers. (and this comes from someone that LOVES freemium models)
If you got 30 teams signed up, that means you can get 100. If you can get 100, that means you can get 1,000.
As you start building the business, you'll be able to acquire larger customers that will pay more per team/user and don't care about freemium. I would say your focus should be on acquiring similar customers to the ones that you have now and building in more features that allow you to charge more per customer, not less.
Thanks for sharing your thoughts so extensively! I agree with the points you mentioned. The reason why we started to think about a different business model in the first place was to accelerate growth because it took us quite a while and a lot of work to get 30 customers. Nevertheless, I totally agree to the points you made and I believe we will continue to focus on that model.
In case there's anything I can do for you, reach out any time. Best from Maastricht :)
If it took you less than 3 years, I think you are in a really good spot. You are at the point that it might make sense to take on some funding to invest in marketing.
I would check out this by Jason Lemkin. I think it will give you a ton of direction/confidence about the path to go.
http://go.saastr.com/rs/720-RST-319/images/The Ultimate Guide For Scaling%2C Sales%2C and Raising Capital- 100 SaaS Questions Answered.pdf?mkt_tok=eyJpIjoiWm1FMVptVmtOV1kwWlRWbCIsInQiOiIrM0hISmZSeVdUU081eldUOWhqb1dZbjBpUWpOaWZwSnpUeW9hVkxzdVRhUXFrUXhaK1pHdmtRclV6K3ZaajFJOUNSOVRhM2xxXC9Wb3dhYkFQR1VtOVdXSGpBclNHYk1zYVpZRGdUYUZTZEhtKzFlVXZiYUlIMWlkVkZiaU9pM20ifQ%3D%3D
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