AI is Driving a Freemium Renaissance. Run Toward It.

 

So there are two massively different vibes in B2B and Cloud and SaaS today:

• Folks fighting to keep slowing growth going.  Which, perhaps ironically, leads vendors to be less customer-centric.  Here, we see threats when customer attempt to cancel, big price increases every year, and renewal managers trying to force customers to buy extra seats they don’t need.

but also

• In many high-growth AI-fueled spaces, massive competition as well.  Which is pushing them to be more customer-centric.   OpenAI, Claude, DeepSeek, etc. are 3 big examples.  All give you so, so much … for Free.  It’s like the Good Old Days of Slack and Zoom.   Which back in the day, were so Free you almost couldn’t believe it.

So as part of the 10,000 new vendors we’ve seeing a rebirth of Freemium on many levels.

How many AI-first tools are Freemium?  Let’s ask them:

• ChatGPT says 70%
• Deepseek says 40%-60%
• Claude says 60%-70%

If you are building a direct competitor to ChatGPT, you probably have to copy their pricing model, like DeepSeek.  So you’ll know this.

But for the rest of the world?  I want to challenge you that the rise of AI may be re-training us to expect Free as the default, and to expect the Free edition to actually be great:

• PagerDuty, e.g. has gone much more enterprise — but they are also doubling down on Freemium.  In fact, all their customer growth is from Free.  Even as the big push is $100k+ deals.  More here.
• HubSpot has gone both upmarket AND doubled-down on Free and Cheap, too.  At the same time.  Today, 47% of its customers … start on its Starter Edition.  More here.
• Cloudflare has doubled down on its Free edition and 200,000+ small customers — even with 65% of its revenue coming from its Large Customers.  More here.

Free and Freemium are back.  Not just for consumer and SMB.  But as a pipeline for bigger customers, too.  Cloudflare, HubSpot, PagerDuty and many more are proving this by doubling down on Free, Freemium and their smallest customers. Even as they go more enterprise.

But what about the “cost of AI” many start-ups ask?  We can’t afford Free and Freemium.

Cry my a river.   And first, costs are falling so quickly in AI this year, it’s epic.  What cost a lot last year may barely cost anything this year.  And second, just get good at it.  Get better at using AI.  And costs often will fall.  And third, embrace it.  Find a way.

I’m a small investor in Opus Pro, which is the #1 video clipping tool.  It’s always had a massive amount of Free users — they expect it.  And even when AI costs were 10x what they were today, it managed to be profitable.  It wasn’t easy, but they worked on it every day, every hour.  They had it.  And they found a way.

Some categories demand a Free and Freemium edition.  Almost every category, outside of very, very enterprise software, can benefit from it.  Do it right, and you’ll have 10x or even 100x the size of folks championing you.  And marketing you.

And finally, customers are expecting Free and Freemiun more and more often.  Don’t run from it, especially in tougher times.  Embrace it.

SaaS was always supposed to be … a service.  And often, one you can try before you buy.  It’s time to get back there.