Growth April 30, 2020

Why $9/mo is better than freemium

Jane Portman @uibreakfast

We're extremely excited to introduce a new Starter Plan for our customers at Userlist. Starting today, SaaS founders can enjoy the full set of features for $9/month from day one, until they hit that milestone of the first 100 customers.

In this article you'll learn how we arrived at this decision, why it's not freemium, and why we're so thrilled about it all.

TL;DR

Here's what we hope to achieve with this new plan.

  • Help fellow bootstrapped founders, especially during these turbulent times. That's why we are in business. Current crisis will likely lead to many new online businesses who are tight on budget.
  • Make Userlist a no-brainer for any new SaaS company.
  • Reduce setup friction, as the integration will happen in the very early stage.
  • Address this early period before our customer's products launch, when it doesn't make sense to pay the full price just yet.
  • Help our customers grow, as we enable all features and channels (both email and in-app messages) from day one.
  • If you grow, we grow.

Why not a free plan?

When the crisis came along, we started actively discussing a free plan for the first 100 users. After all, expansion revenue has been huge for our growth. After a bit of thinking, this idea evolved into a $9/mo plan.

Here's why $9 is better than free (and not because of the money itself):

  • The biggest one: eliminate potential misuse (particularly spam) — $9/month is very low, but not free.
  • Keep the upgrades smooth. With a free plan, collecting card information for the upgrade can get painful.
  • Keep our billing system and onboarding flow as-is, without having to refactor it.

Charge more?

It's easy to say "charge more" from our standpoint, when we generate enough revenue to afford nicer tools. But one of the reasons we started Userlist was to provide an affordable tool for small companies.

I vividly remember myself in 2017, launching my first SaaS product, Tiny Reminder, as a solo non-technical founder. I had no revenue yet, but desperately wanted to send onboarding in-app messages to my users. The only tool available for that was Intercom, starting at $99/month. I paid that, but it didn't make me happy at all.

So we wanted to build a quality tool that could make the bootstrapping journey more enjoyable than that.

Limit features?

Should we differentiate the plans of features, in addition to the user count? Shall we enable both email and in-app messaging for everyone?

We decided to adopt a growth mindset — make all features available from day one, across all plans. One of the current troubles is the setup friction, so it's much better if our customers set up all channels early on.

This is exactly what Stripe does — they don't lock people out of features. Instead, they use all resources to help new businesses: Stripe Atlas, Indie Hackers, etc. 😉

Unlocking all features also feels amazing because it's a way to help founders. That's why we exist in first place.

It's a big step for our team. We hope that you'll love this new $9 plan. Onwards!

  1. 5

    Good idea. I really like low monthly payments versus one time costs. If a tool offers a trial and a low cost, then I consider it.

  2. 5

    Wow, what a timing with this post, I just added a $9.99/mo plan to my product (but it was as an alternative to only the $99 lifetime license, not instead of a free plan). My reasoning with having a cheap monthly plan was to allow users to try the product without having to pay $99 (even though they have a money-back guarantee, it's easier to start with $9.99 instead of $99).

    I also considered adding a free plan, but being a solo developer I think that would make my work harder and I will not to be able to improve the product or offer support as good as I can for premium users. Having a free plan, usually means that users will have a "free" experience, that is a less polished one.

    1. 1

      Very legitimate reasoning! Reminds of why SaaS subscription model became popular in the first place.

      Also, maybe $9 is the new free 😂

  3. 2

    Very intresting. Thanks for the write up, Jane! Question for you. I've looked at Userlist before to use with sendview.io, but the connection to Segment is where I got hung up. Is this $9/mo tier designed to fit within Segment's free tier? Any insight on your thought process around that piece?

    1. 1

      Thank you Gregg! This small tier will probably fit Segment's free plan while you grow. However, you don't have to integrate via Segment, you can send data directly to our API (learn more here).

      To be honest, matching Segment's pricing was not on our list of priorities when we were opening up the $9 plan :)

      1. 1

        No kiddin, all this time I thought I had to have a Segment account to use Userlist. Well then, maybe I will take a closer look now that you've got the $9/mo tier. Thanks!

        1. 1

          Awesome, glad we cleared that up :) Welcome anytime.

  4. 2

    It sounds like it is freemium! You're just drawing the free line at 100 users per account.

    1. 2

      Something like that, yes 😀

  5. 2

    Phenomenal idea! If I sign up, promise to delay the onboarding sequence (to me)? I am still working on the MVP but want to take advantage of the deal ;-)

    1. 1

      Thank you! You're welcome to take advantage of the deal anytime :)

  6. 2

    I have been asking myself similar questions ... free trial with fixed amount of days or forever free plans (some users may never convert this way) ...

    1. 1

      Yep, it depends on your business, too. In our case, an upgrade is inevitable is the user count grows, but trying to solicit a credit card during that upgrade is another story.

      E.g. what shall we do with active accounts who grow out of their free plan, but don't add a card? Cancel their entire automation setup? That'd be brutal.

  7. 2

    Great move! Having all the features from the start also helps getting users exposed to all the product capabilities, helping them not to move to other options because they "didn't know this thing could do that".

    Regarding the price, in my particular case, I had hand coded part of that functionality because the closest option I had found was around $99 with much more than I needed and could afford for a baby project. But a $9 option that "grows with me" and saves me precious time (even if I already have most of it) is a no-brainer.

    So, I'll give Userlist it a shot in the following days!

    1. 1

      Thank you very much! Couldn't say it better.

      P.S. I'd go with Timemute. Also have a burning desire to spell capital M in the middle ;)

      1. 2

        Thank you, Jane! :) And congrats on such a fantastic product! :)

        1. 1
  8. 2

    Clearly laid out, we're thinking of doing the same (have spam issues as well)

    Most early stage companies will use a free template or paid template.

    Why not get them on our platform first.

    Then when they're ready to upgrade, its easy for them.

    1. 1

      Thank you Volkan. Great minds think alike! Right now is very good time to make that happen.

  9. 2

    Makes a lot of sense Jane 👏. I totally agree about charging something instead of nothing and getting their credit card in your system to make upgrading seamless and keep our spammers/tire-kickers. I'm excited to see how this works out for Userlist!!

    1. 1

      You bet we're excited, too. Thanks so much Ward 😀

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    1. 4

      The free-trial is all you need to try the system in this case. And it does cost. Free users are also users that need attention, support time, etc.

      1. 1

        Oh sure it does cost 😊 And this so much depends on the product, market, and a hundred other variables. E.g. freemium is indeed the way to go for the majority of B2C.

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