Roughly two types of Freemium strategy
Strategy #1: Get you to upgrade to Paid as fast as possible. Same day ideally.
Strategy #2: Make it Free so good you can't believe it and might never need to upgrade
See, e.g., Canva, Slack, Zoom, Calendly, etc.
— Jason ✨Be Kind✨ Lemkin (@jasonlk) March 18, 2022
I am a big believer in Free editions — when they work. And right now might be a great time to finally figure out how to make Free really work for you.
You have to do it right. You can’t play games, or strip the product down too much. But look at Slack, Canva and Zoom as just 4 great examples. They showed that when you do Free right, it unleashes an army of champions to power you to $1B + in ARR and beyond. Slack and Zoom don’t just do free trials, or limited-time free products. Their free editions are awesome. And you can use them forever.
And Atlassian and New Relic and other Cloud leaders have recently added and expanded their free edtions:
At Adobe Sign / EchoSign, we launched not only with a Free edition, but we launched 100% Free. We thought it was a great marketing strategy, back in the day. 100% Free really wasn’t a great marketing strategy for us in fact. At least, not at first.
It got us like 10 free users at first. That didn’t pay the bills. And gave us all the wrong feedback.
Just having a “Free” version alone doesn’t get millions of folks to use your product. Not usually. Don’t fall into that trap.
Sales team: lets move all the best features into the paid product
Marketing team: let's move all the free features into a free trial
CEO: let's go long and build the brand
— Jason ✨Be Kind✨ Lemkin (@jasonlk) August 16, 2019
But we kept it. Mainly because we loved free editions ourselves, and wanted to push the team to make a product so easy to use, it could be self-provisioned.
And over time, the Free Edition eventually achieved its goal. We created 100,000+ happy, free edition ambassadors to spread the word. We set a Zoom-like limit of 5 transactions per month. We found that our average paid user sent about 8-10 contracts a month. So we weren’t giving up much by letting folks do up to 5 e-signed contracts a month for free.
And while it wasn’t a marketing miracle in Year 1, over time it helped create and reinforce brand. And it enabled our more tech-focused customers to get comfortable trying on their own. You can see the impact here, back in the day. We had the most visitors (and thus brand impact) back then:
And then we were acquired by Adobe, and Adobe did a great job at many things. They took a $1m a month / $12m ARR product and grew it to nine figures in ARR. They hardened and spread it across the globe and did many things.
And one thing they also did almost the day I left? They ripped out the free edition. It’s gone.
(Well, you can still find it here if you want. But it’s deeply buried). They kept the free trial though (see below).
Typically when a SaaS business with product/market fit ditches a well received free plan, it’s the beginning of the end. Not always, but most of the time because the long-term impact of removing the free plan was not considered.
— hiten.eth (@hnshah) July 15, 2023
Why did they kill it so fast, if it had so many happy users? Well, at that point there were probably 150 folks working part or full-time on the product. And you know how many were compensated by the number of free users? Zero.
- Sales always hated the free edition. It just created confusion as to why we had a free product, and also a product with $1m TCV customers. The last thing sales wanted to do was accidentally get on the phone with a Free edition user. Even the most junior SDRs and BDRs dreaded it. So few of them would convert, and even if they did, it was for $15 a month!
- Marketing hated the free edition. They wanted to push everyone into a free trial instead. A 15-day free trial is much better for marketing’s short term goals. It quickly qualifies the lead for them.
- Support really, really, really hated the free edition. Not all of support. But a lot of it. Because every trouble ticket, every tweet, every complaint from a free edition user just took time away from paid customers. Even if support was segmented.
- Engineering didn’t really love free edition “customers” either. They didn’t care too much, but it was also another set of workflows and issues to deal with. By getting rid of it, a lot of onboarding issues could be offloaded to customer success and humans. Free products have to be better than paid products, in many ways.
So my point is, the Free Edition had no champion except me — the CEO.
No one made their plan or KPIs or OKRs based on the Free Edition. No one got high fives at the end of the quarter when we hit quota for free transactions. There was no owner.
I could have and should have created a senior owner of “Free”.
My only real point is a strategic one. Free classically is perhaps overdone. Why? Because most SaaS products simply aren’t viral enough (sorry about that term today), at least not with a high enough viral coefficient, so that Free self-propagates quickly.
But when it works, often over time, it’s an amazing thing. It’s an army of brand ambassadors, often 10x or more larger than your paid army. And to really make it work, especially if you want to push it today, you probably need a VP of Free. Often, that’s really only the CEO, even in relatively large SaaS companies. Even there, there is no VP of Free.
And today, when at least knowledge workers have more time for discovery (stuck at home), but less budget and bandwidth to buy new products … maybe it’s time to make someone your VP of Free. Give her a core KPI to grow free users, usage, etc.
And see if your brand can blossom from that, even in more challenging of times.