Moving away from free tier
Across the SaaS industry, there's been an evolution in the idea of a Free Tier. “Freemium can be a great growth vehicle,” wrote Liam Gooding, CEO of Trakio, but it can be a deadly killer for SaaS companies. Some SaaS companies have moved away from Free where it didn’t have a good fit. Free plans don’t work and Screw Freemium: Use a Free Trial
Since we started offering our service, we experimented with both a feature-limited free tier and a time-limited free trial. “If someone values a product they'll pay for it” wrote Dave Nevogt about Hubstaff pricing. (Though they still do have a feature-limited free version!) The question isn't free-tier or not, it's about finding the right fit and pricing for your market.
Whether or not to keep a free tier depends on the total cost to maintain the free users versus the conversion rates of free tier users as compared to 14-day free trial users. It also makes a difference if your company benefits in any way from the network effects of having a large no-pay user base.
Scaling in a sustainable way
Often new clients ask us how we’re funded. They ask because they care that we've been around since 2012, and they want to know we're going to be around longer. Though we've been approached by investors, we are self-funded. This means we're not aiming for high-growth, but rather high-sustainability. Our customers are our investors, and now is a great time to thank our customers for using Inline Manual and helping us grow.
For that reason, sustainability is central to everything we do. And the free tier wasn't sustainable.
We pride ourselves on outstanding customer service. We made a choice to grow our Customer Success team to ensure everyone who uses Inline Manual gets support from a real person. There was no way to offer tiered support for a free plan. There’s awesome support or it’s just not support. Scaling this to the extensive free tier is not feasible as we continue to grow.
The free tier was also a limited version of Inline Manual which didn't reflect well on the features and capabilities of our service. We realized it is better to limit the trial by time and not by features.
Instead, we’re extending the hours of the support, and we’re building the team. By eliminating the free tier, we can ensure all of our customers get the full Inline Manual experience.
What about the benefits of a huge audience?
Software services like Facebook or Twitter gain network benefits from having large amounts of non-paying users because they resell user data to advertisers.
For us on the other hand, our audience is made of the customers who pay for their service and the thousands of interactions their customers have with our application every day.
When comparing users on the feature-limited free tier and the time-limited free trial, our free tier users were less likely become paid users. Many of the accounts also turned out to be dormant; they were created and then abandoned. These users needed only a free trial.
Instead, we’ll be focusing on delivering a better onboarding and demo experience for those who are trying out Inline Manual with the free trial.
What about referrals?
We did place branding on the free tier accounts, but referrals from this link were limited in comparison to the great word-of-mouth referrals we were getting from paid customers.
Free tier users could not experience the entire application, such as Analytics, because we could not invest in making this feature available to everyone for free, forever. We suspect that means they would be less likely to recommend Inline Manual and become potential word-of-mouth advocates. Paying customers, on the other hand, tend to come to us for one purpose, and then find the tools can be used effectively in other areas. They see the value when they connect their user data to our application.
Instead, we’re offering flexible pricing which means companies can maintain their costs in relation to their needs. The flexible pricing model helps us keep Inline Manual as one of the most affordable when compared to our competitors.
What we’ll be doing:
We’ll keep in contact with free users during this time to make sure you’re prepared. Here is the schedule:
- Free tier closed to new users: Users can no longer create free tier accounts effective as of today, November 7, 2016.
- Free tier end of service countdown: Current users can stay on the free tier until 12 am Jan 1st, 2017. The tours will no longer be available publicly on the end-point websites, but users may still log in to upgrade their accounts.
We do hope you’ll consider upgrading with our new pricing that we hope you'll find is transparent, flexible, and fair. All free tier customers can initiate a 14-day free trial even if they had previously tried it before. We want to show you our new features!