Free Plans are Back in Fashion in SaaS. Big Time.

Those of us who have been doing it for a long time remember when Free plans seemed everywhere on the web, not just part of self-service apps.  Those of us who came from B2C have Free in our DNA as a core part of an acquisition and onboarding process.  Heck, when we launched Adobe Sign back in the day, we forgot a Paid edition and just launched 100% free!  Oops.

But then Free fell out of fashion in SaaS.  Not entirely.  Zoom and Slack accelerated with incredible free editions.  But more common in the march to drive up ACVs and revenues quickly was moving away from Free, or minimizing Free edition.

Overall, you saw more and more self-serve products more to free trials instead, and many more team and enterprise-focused products just skip free altogether.  Free users create a lot of noise.  They ask a ton of questions.  Most never buy.  It never seems worth it — in the short-term.  And the data often says if folks don’t convert to Paid quickly — they almost never do.  These data almost always argue for a short Free Trial, not a never-have-to-pay Free edition.

But fast forward to now, and the Cloud is exploding and SaaS leaders want to take advantage of that.  And so many are now doing Free versions for the first time — often at $100m+ ARR or even $1B+ ARR:

Now some of these moves are clearly reacting to competition (e.g., New Relic and Datadog), and others are likely just experiments.  What is consistent is they are adding Free editions later — to highly successful products.  They aren’t Freemium Only.  But so many Cloud leaders are adding a Freemium and Free layer.

Free is back.  Though it never went awayBut the customer should be first now.  Every SaaS customer already has used 100+ apps.  They are veterans.  They are experts.

Let them try the way they want to try.  And heck, stay Free for years if need be.  You can always convert them later.

At least don’t be scared of the Free edition.  Don’t let the sales team or the support team convince you not to do it.  They’re right it takes more work.  They are right Free customers can be demanding — without paying.  But if Zoom and Slack and MongoDB and Atlassian can do a Free edition — can’t you?

At least think more on it.  Done wrong, Free is a distraction.  Done right, it makes you and the product better.  Even if all it does is get you more raw sign-ups, that builds your brand and your market position.  If they have a great experience, that is.

At least think long here.  If Free is a better experience, do it.  But you’ll have to push it through as founders.  Because the data will push the rest of the team in many cases for shorter trials, not Free.  Short trials are what help you close more revenue this week and this month.

Published on June 21, 2021

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