[TheJoeMan]

Could anyone share the economics of letting people use it for completely free? Do you charge a lot for the people who do convert to subscription? What kinds of things can you withhold for the paid version?

I’m just curious if there’s any research on say charging everyone $1 vs charging 1/10 people $10.

[brianwawok]

Even a $1 fee scares off 98% of users. The friction between FREE and ANYTHING BUT FREE is really really high, and a lot more than the friction between $1 and $2. I think for many SaaS platforms it wouldn't be worth it.

If you are doing a free tier, the next level up likely should be at least $5-$10 a month. Or you are overcoming a giant hurdle of getting someone to pay, only for $0.55 after payment processing fees.

* Some sites for sure do the $1-$2 thing, but it seems like not a best practice in general.

[TheJoeMan]

I like your thoughts on how the free<->notFree is the large hurdle, and that's why incremental cost increases are absorbed

[cxr]

Following logic like this is why so many aspiring entrepreneurs don't have more paying customers, and it's _the_ source of ad-supported everything.

Want a healthy online economy of individual consumers that isn't bifurcated between people who might pay because it's related to their one main hobby/business vs the masses who do everything else on Facebook and YouTube? Then let them have a way to give you 20 bucks for what they would have consumed over the next year on your free tier.

Instead of letting me give you 20 bucks one time to try something that looks interesting, which is an easy decision to make, you demand that your customer base divide themselves between casual users who will never leave the forever free tier because your prices won't let them and your billing plan immediately† brings to mind thoughts about the overhead of trying to cancel something that turns out not to be worth the price tag, vs wantrepreneurs who can rationalize a recurring expense at the same price as a year of Amazon Prime because they see it as the cost of doing business since they "know" they're eventually going to win the startup lottery.

† Autopay availability should feel like an easter egg that people can seek out and enable and get a sense of satisfaction from because it makes them feel productive. If you're handling it in a way that makes it a source of anxiety, then you're fucking up. Don't look around and say "everyone else is doing it". If there's a known problem (like "it's really hard converting people into paying customers" is a problem) and everyone else is doing the same thing, that's your signal to not do that thing. (How do so many aspiring capitalists not get this?)

[sillysaurusx]

> Following logic like this is why so many aspiring entrepreneurs don't have more paying customers, and it's _the_ source of ad-supported everything.

It has the merit of being true, however.

[massiarri]

If it's a B2C model, then ad-supported might be the way to go, but if it's B2B, there are lots and lots of great examples of making things work. You definitely need to figure out the math about the incremental cost of additional free users vs. the margin generated by those that pay. But assuming the math holds, the product-led model works wonders.

From Zoom to Calendly, from HubSpot to Monday.com, the free tier generates an enormous user base that leads not only to upgrades, but also to a fantastic feedback loop that makes the product stronger and stronger.

In the space where we operate - the democratization of design - the most successful example is by far Canva. It has over 99% of users that are on the free plan, but with 60m users, that 1% is golden, and generates $1b in ARR. Melanie Perkins recently shared some of those numbers and their journey here: https://medium.com/canva/a-note-to-the-canva-community-1d4b0...

So, in the end, it's all about making sure that small % of customers that ARE willing to pay, pay you enough to make it all work. It sounds obvious, but it takes a lot of time to figure it out (we certainly do not have all the answers yet, even after 7 years). But here's the key: among the large amount of free users lies the very audience you need to listen to in order to determine what people are willing to pay for. That discovery process ends up being the game changer.

[TheJoeMan]

I definitely can think of examples of free -> paid being enormously expensive (Dropbox?). But is it a required result of bifurcating the customer base?

[tlogan]

BEE editor is a part of Growens. I believe key to the business model is upsell to other Growens services (MailUp, Datatrics, etc.)

And your usage is probably going to ingested by Datatrics (their marketing predictive platrform).

[massiarri]

No, the model is the product-led growth model. For example, take our BEE Pro product: we do tens of thousands of monthly users of the free editor at beefree.io, of which over 10,000 become free trial users of BEE Pro every month, and of them hundreds convert into paying customers, every month.

Similarly with our embeddable visual builders: you can get started completely free of charge, then move up to a paid plan when you need more. And with this product there are actually many that "need more" from the get-go, so they get in touch with our sales team to make sure that the product is a good fit, do a proof-of-concept at no charge, and then go live.

Some more thoughts on being product-led here, if you are interested, here: https://www.linkedin.com/pulse/product-led-vs-product-focuse...

[TheJoeMan]

Thank you so much for sharing the ballpark numbers/percentages of the free->paid funnel. I'm not starting a competing mail application (haha) so my use case might be different but it's very useful for comparison.