Dear SaaStr: Should We Introduce Freemium in Our B2B SaaS Startup to Boost Growth?

Probably not.  Not because in theory it’s a bad idea.  But because for most folks even at $1m-$2m ARR, it’s already too late.  In practice, if not in theory.


Two reasons:

First, if you don’t start off with a Freemium offering, it’s very very hard to add that DNA later, once you have real revenues, processes and software optimized around larger customers and deal sizes


  • Requires a much more elegant onboarding (no human assist) that most enterprise software
  • Requires millions of users to make the conversion funnel work. More on why here: Why You Need 50 Million Active Users for Freemium to Actually Work | SaaStr
  • Requires that the users get huge value out of the product in minutes, without human interaction to explain that value
  • Distracts the sales team
  • Distracts the marketing team
  • Etc.

If you start there, and do OK there, you can then go upmarket. Your product and your team will have the DNA.

But if you have a product today that has thousands of users (not millions) and requires onboarding, selling, training … the odds you can build a freemium product that will make any money is close to nil.

Second, it can be a huge distraction, done anything less than 100% right.

If your sales team is closing $20k deals, who will deal with $200 freemium single-seat customers?  How will you split your marketing budget?  Your product team?

If you are going to add PLG and freemium later on … it can work.  But you have to truly, really, go 100.000% all-in.  And brute force the conflicts with your existing sales and marketing motions.  Are you committed to that?

Lucid Software: How 10 Million Freemium Users Built Our Enterprise Sales (Video + Transcript) | SaaStr

So I’m not literally saying don’t add a Free / Freemium addition.  HubSpot, Atlassian, and others added “Free” later.

And I’m not saying don’t add a PLG motion.

What I am saying is deeply understand what it will take to make it a success.  You likely are looking for a shortcut.  It’s often quite the opposite.

A related post here:

Five “Cons” To Adding a Free Edition

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