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I don't know your unit economics (but they sound fascinating), but generally free trials are considered a marketing expense and would be worked into the CAC (customer acquisition cost). Then you can trade-off CAC with lifetime value (LTV) and a target payback period – i.e. the break-even period. Let's say a search costs 1c, the free plan therefore costs $1. With a 5% 30d conversion rate that's a $20 CAC. On $10/m for 700 searches, that's just under 7 months to pay back which is quite long, but drops to just over 3 months if users average ~400 searches, so I can see why you don't want to roll over. That said, if you believe you have a big LTV/long retention, retained users past their payback period should be more than enough to pay salaries/R&D/etc, so maybe there is more flexibility. > Selling product at cost or below is something VC funded startups can do, which we are not. I know it often feels like this, but I think the answer is more complicated. It's often hard to know what cost actually is – when you're hiring, growing, and selling a service running on tech that is hard to price. I'm interested in how you know your cost per search at such a level of precision. It suggests to me that either you've done _way more_ work measuring it and optimising your infrastructure than I expect for a company of Kagi's age, or that it's a fairly naive number (understandably so!) based on dividing infra cost by number of searches. If it's the latter, are there economies of scale that significantly change the number if you have, say, 10x or 100x the user base? |