Free tiers are/should be a marketing tactic that gets people comfortable enough with your product that when it comes time to put money down, they put it on your thing rather than the competitor. It's when free tiers don't have a sufficient draw into a paid tier that you run into problems.
Microsoft figured this out relatively early on during their monopoly lawsuit which they cleverly settled by donating a bunch of Microsoft products to schools so that the next generation of the workforce would grow up on Microsoft products and become commercial Microsoft users in the workforce (and I've seen Apple use this same approach since then). What was ostensibly seen as a punishment by the legal system simply entrenched their position further.
And in gaming, there's an entire industry around "free to play" games that make billions of dollars, although I sincerely hope B2B tech doesn't take marketing inspiration from them.
Microsoft offers their products to educational institutions for a fraction of the price. You just have to license your staff and get the licenses for your students for "free". And the staff licenses for education cost yearly what businesses pay monthly (MS365 E5 for about $90/year).
In return schools teach their students Microsoft products in school and you can't really beat the pricing. Because running your own infrastructure will be more expensive especially if your school isn't big enough to have it's own IT department. Prices are rising though because you can't license box versions anymore.
So you now have the choice of paying for Teams, SharePoint online and not using them and licensing and running your local file servers, AD etc. or switching more of your infrastructure to the cloud and increasing the lock-in.
This is really worrying to me, but from a cost perspective you can't really justify continue running a lot of infrastructure, especially if your local government doesn't have a lot of funds in the first place. I'd rather spend that money on hardware that the students and teachers can use than pay for servers and licenses.
Yes I‘m aware boxed versions are still available. But they aren‘t available under the contract the state negotiated with Microsoft. And that’s the terms the schools use to buy licenses if they don’t want to pay a premium.
To change this there would have to be political will to reduce the lock-in and maybe offer a state run cloud service.
There is absolutely educational pricing for boxed Office. It sounds like you might be upset about the choices your State made, and are conflating that with what is possible.
> and I've seen Apple use this same approach since the
Google as well recently - unlimited free G Suite (now Workspace) for schools was a massive draw a few years ago, although they are starting to turn around and monetise now they have a captive audience
Same with gmail. Initially launched with the idea of "Don't throw anything away - you'll never need to delete another message" but now the landing page of gmail talks more about security, productivity and other things since eventually you're gonna have to pay for more storage.
Precisely. All of /r/homelab on Reddit pretty much centers around enterprise features for free/cheap so they can learn off the job. It's a win for the employer, win for the software manufacturer, and a win for the engineer who is hopefully doing it out of enjoyment rather than pressure.
This is a race-to-the-bottom though. Or a marathon-of-deepest-pockets, whatever you call it.
If you decide to make people pay up, a competitor will step up and offer a free version, subsidised from VC or lucrative other businesses. And if the competitor isn't free, at least its cheaper: triggering a race-to-the-bottom, ending in "free".
In any market, for any service with potential, there will be a free, or at least cheaper option. Untill mono-/oligo-polies are established and prices go up, at which point the customers are "extorted" or close to it: all the losses up to now, must be paid from revenues now.
This is seen everywhere (from food delivery, via webhosting, to PAAS to SAAS) and a clear and present proof of why "free markets" aren't automatically efficient and need authorities poking around in them - or else they hardly work at all, let alone efficient.
This is only true under the premise of profit motivation or some other kind of competition, which is not inherent to the FOSS ecosystem.
>In any market, for any service with potential, there will be a free, or at least cheaper option.
Which is not bad at all. IMHO the only problem here are business decisions, slowly locking you into something. FOSS nerds prefer protocols over platforms, which is why Posix and Linux living up to it are so incredibly important. You are right about the markets being misaligned, which is why we have to be very sceptical about big corps buying into various FOSS-foundations.
I presumed we were talking about the service part and not the software part. My comment was about running a service and not about offering FLOSS (or no floss) software.
Though I expect the same applies there too, only that "race to the bottom" is less of a negative thing. And could probably be "race to open-source". Where slowly all paid-for software gets FLOSS alternatives that -at some point- offer competing support/features/experience and therefore make the paid/proprietary alternatives more or less obsolete. E.g. while Oracle is still running and offering their database, on the whole, the world runs free databases. While Microsoft still sells billions of OSes, on the whole -including Android- the world runs Linux mostly. And except for OSX, hardly any other paid-for unixes survived. And so forth.
I have a side gig B2B SaaS. My business users don't care if it's $1/year or $1000/year or $10,000/year. It's the same HUGE amount of paperwork for them either way, so the right answer is $10,000/year. I do allow very long trials.
I do still consider offering a "free" tier, but with the limitation that there is no free support, and each support incident will cost them $200. But then I remember what I said above.
You need to have an idea of the annual revenue of your prospects and price accordingly.
A $10,000 purchase for a small company with $100K revenue is going to be a huge expense. For a company with $100MM annual revenue it's a rounding error.
The guy is not talking about free tiers but about free services though.
Free tiers are good if correctly sized compared to paid tiers: they help users get to try/know your service, they allow students and kids aroung the world to play with things, they help small companies grow; if your free/paid tiers are well done, those users who start with the free tier will grow to the paid tiers. If not, it's should be ok too, not everyone is going to need all your features.
I can't agree more... I'm the creator of SSLPing, and I can say it sucks BIG TIME to discover people loved your product and your product is on the first page of HN just after you had to kill it !
Free tiers are an essential; when settling on a service I will try many, in parallel with our current system. If I'm happy it is better I will switch,. when either immediately, or after a short period results in us being paid at a mid tier. If I have to pay to try, and find out if it is any good and works for our specific cases, I'll try it after competitors - so probably won't get round to it - as something else probably meets our needs first.
Free trials are an essential for the reasons you describe - but it doesn’t mean it has to be free forever - just for long enough to make an honest evaluation. 30 days is the norm, and that seems fair to me.
AWS (and generally all *aaS providers) free tier(s) are enough to experiment with, and get a feel for, but are limited enough that using them in any meaningful way is very difficult without incurring cost.
Surely you can appreciate that "time" is not the only commodity that can be meaningfully (and reasonably) limited?
That said, much (but not all) of the AWS "Free Tier" is really just a 12-month free trial. Only a small percentage of the offerings are truly longterm freemium.
I enjoy seeing less affluent audiences use my product for free. It's hard to know who can who can't pay so you have to make an arbitrary call. In my case, I assume Android users can't pay and iOS users can. I have run some experiments and I have seen that this is mostly true
Some people will think that this is unfair, but I think it's great
Microsoft figured this out relatively early on during their monopoly lawsuit which they cleverly settled by donating a bunch of Microsoft products to schools so that the next generation of the workforce would grow up on Microsoft products and become commercial Microsoft users in the workforce (and I've seen Apple use this same approach since then). What was ostensibly seen as a punishment by the legal system simply entrenched their position further.
And in gaming, there's an entire industry around "free to play" games that make billions of dollars, although I sincerely hope B2B tech doesn't take marketing inspiration from them.