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Ask HN: Is a free plan worth it or not? Trying to figure out our pricing

29 points| markbao | 15 years ago | reply

Hey HN,

We (me and lleger) are Supportbreeze, and we're trying to figure out our plans for our launch next week. Our major contention is concerning free plans. We're debating whether or not we want to offer free plans at all. On one side, we see the value of offering a free plan: great entry vector, good promotional value, something that our competitors don't have, etc. However, on the other hand, we don't quite see the usefulness of a free plan on a business app, considering all plans come with a 30 day free trial and that it would affect the rest of our plans. We're concerned that it's a sinkhole that won't have any real benefit.

The main thing we think we'd lose by nixing the free plan is the influx of people that will simply start using our app instead of ignoring it if it were paid-only. Knowing that at some point they will need to start paying, is a trial enough enticement to sign up?

What are your thoughts? Should we abandon the free plan in light of our free trial period? Are free plans absolutely necessary, even for business apps? Thanks all!

29 comments

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[+] wolfrom|15 years ago|reply
First of all, I recommend reading Don't Just Roll the Dice if you haven't already: http://www.scribd.com/doc/25050778/Dont-Just-Roll-the-Dice-P...

This was talked about earlier today (http://news.ycombinator.com/item?id=1613852). Unless your app requires a whole pile of non-paying users for network effects, free accounts don't seem to bring in much value. If you want customers who are going to pay at some point in the future, trials seem to make more sense than perpetually free versions.

You could of course try running without a free plan to start, and add one if no one's taking you up on the free trials. But for those people who use the free trial but walk away without signing up, I doubt a free version would have resulted in a future conversion from them. More users equals more support; free accounts could destroy your business.

[+] AndyKelley|15 years ago|reply
"Give your product a personality. 37signals may not sell the best project management software in the world, but it has personality. The 37signals team stands for something: uncompromising simplicity. Want an extra feature? Tough. If you want features, buy something else."
[+] willheim|15 years ago|reply
Sounds like a BtoB venture. Who are your target clients? If they're well funded/profitable/high end then all you need is the 30 day refund program. If they're bootstrapped start-ups who need to pinch every dime then a limited free account is necessary and then aim for the up-sell.

I struggled with this question myself as all the advice I got was for there to be a free account. You know what? I don't like free. It doesn't make sense in business. It may work with Youtube (ad sponsored and still loses a boatload of money but G has deep pockets) but we've seen many who tried free ended up going paid or free and limited (Hootsuite just recently). There may be nothing worse for your business than going paid and limiting what people had come to expect for free (seen this time and again).

Besides, people take advantage of free. They demand support and effort with nothing in return. If you fail to support them well you risk a bad rep. A bad rep will sink your business. However, if you are paid from the start, turn out a great product, and support your clients well, you'll earn a great rep which in turn builds your business.

Go with paid from the start and have a 30 day refund policy. That way people can try it all out, you can find out exactly what their needs are support-wise, and if any ask for the refund to leave you will know exactly why and can address those issues.

It's time to end "free".

[+] kevinelliott|15 years ago|reply
Make a free plan that is very restrictive. You want people to be able to quickly assess whether or not the tool is useful to them. People are use to being able to trial software first (it's been done for years now). Allow them to try all the features, but not have any ability to use it for real production use. So let them accept 5 support requests, perhaps.

Alternatively, if you don't, you have to have great screenshots and screencasts. Chances are you will risk losing a lot of potential clients otherwise.

[+] mvalle|15 years ago|reply
How about having a dummy-demo. Basically give the user a taste of the UI without the functionality, ie. just send the user a static html page to get a feel of the interface and how it would work. Of course, it depends on what you are offering.
[+] thaumaturgy|15 years ago|reply
My margins are always really tight. I rarely part with money willingly.

When crossbrowsertesting.com announced their launch a while back, I used their free service just enough to become convinced that supporting them was worth the monthly charge; I've been a paid user ever since, even though I only use it occasionally.

So, I think that if you offer a compelling service, something that provides more value to your customers than it costs them, then a free plan should pretty much only be considered a "demo" of your service. If you've got a good product, then even misers like me will pay for it.

edit: Oh, and also: for a service I'm working on right now, I've decided to use "early adopter" pricing. It works like this: pricing starts at $X / month; for every new subscriber, all previous subscribers receive a $.01/month discount. If or when the monthly prices ever drop, it will drop by the same amount for all subscribers. So, the sooner someone signs up, the sooner they'll get the service for $5/month -- or even free. I don't know if it'll work, but there it is.

[+] edanm|15 years ago|reply
How much beta-testing have you done? I'd work with a free plan at first, simply because the value of your first 10-100 customers isn't the money they bring in; it's the information you learn about your own product.

On the other hand, this is an easily reversible decision either way, but starting paid-only is probably easier to change. In the worst case that nobody notices you, you can always add in a free account in a few weeks.

[+] blister|15 years ago|reply
In all honesty, if you don't have a free plan, you will never get my business. There are way too many apps that I love to fully support financially.

Especially for a business app. My product <shamelessplug>http://userping.com</shamelessplug>; is my first bootstrapped company, and while I'd love to be profitable enough to fully support all the great apps I've come to depend on, right now we're broke, so I have to choose between using your app or paying for another month of hosting. Pretty simple decision.

So, my vote is always for a free option. I think you should feel free to really lock it down and restrict the offerings because anyone who can't afford to pay for a service probably doesn't need 200 user accounts. They probably only need one or two, which should theoretically not cost you very much.

That's my $0.02. I very rarely even try services with a 30-day free trial. I'd hate to get hooked on something that is going to rape my tight budget.

[+] revorad|15 years ago|reply
if you don't have a free plan, you will never get my business.

That made me chuckle. Unless you pay for a product, you are _not_ giving him any business.

Don't get me wrong; I can totally see where you are coming from. I'm pretty much in the same situation. However, you and I are clearly not Mark's target customers, so it's a bit unhelpful to ask him for a freebie. How does it help him?

To make money, one needs to sell to people who can pay. There are plenty of businesses out there, who will pay money to solve their problems. Broke startups selling free apps to other broke startups is not a business model.

[+] dbrannan|15 years ago|reply
"If you don't have a free plan, you will never get my business."

I love your honesty. Clearly you are not the type of customer he is looking for.

[+] Mc_Big_G|15 years ago|reply
Go with a trial instead of a free plan. If your users find value in your service, they'll buy. Put a feedback form on the page that notifies them their trial has ended. If they don't pay, they might complain and give you feedback.

Also, you can collect emails with a free/trial plan, so use that to get feedback and/or try to sell to them again after you pivot on the initial feedback.

[+] revorad|15 years ago|reply
If your app is good enough to charge for any features at all, then you should probably just go ahead with paid plans with free trials. You can make it really cheap for early customers (and keep it cheap for life for them) and slowly increase the price for new customers - call it the cheapium model.

The value of initial users is finding out what's actually useful to them (what they would pay for) and any major bugs/issues in your product. But you have to be careful you are not listening to the wrong users (who never intend to buy anything from you).

You are selling to businesses, so you probably need to focus more on direct and ad-based selling rather than going "viral" among the wrong userbase.

[+] Tichy|15 years ago|reply
I like the approach of GitHub: free hosting for open source projects. Maybe something similar could work for business apps - if not software related, free hosting for nonprofits.
[+] bmcleod|15 years ago|reply
Non-profits are a very large group featuring some very large organisations with lots of money. One of the big international Non-profits jumping on a system would add very significant costs.

Most of the successful ones have plenty of money anyway and given the nature of the tax system you're better off by donating if you want to support them.

[+] philwelch|15 years ago|reply
That's a little different. GitHub's "free hosting for open source" just means "free hosting for public repos". They never actually verify that the code is licensed in any sensible way, whereas others (Google Code I think) actually requires you to select an open source license.

In short, GitHub doesn't at all verify open source licensing, they just allow unlimited free accounts if you accept de facto open source. "Free hosting for nonprofits" requires actually verifying (or requiring the user to assert) nonprofit status, which is a lot more difficult.

[+] notahacker|15 years ago|reply
Actually, Github's model is somewhat different; what they're charging for is the ability to make things private

There are a large number of potential business applications where this might be an important feature which most commercial users and some non-commercial users would be willing to pay for, and it saves the vendor the trouble of policing licences.

Customer support might well be one of those applications

[+] vaksel|15 years ago|reply
how about collecting a credit card, and advertising that you won't charge them for a month?

this way they get 1 month free, and you get to add customers into the funnel.

[+] adamhowell|15 years ago|reply
Best advice I've heard on fixed-length trials:

"[A] fixed-length trial discourages users from using your product - why invest time & effort in something that will disappear in 30 days[?]"

[+] dbrannan|15 years ago|reply
In our experience (examprofessor.com) setting more severe limits to our free plan boosted paid sales 2x, which was very welcome. We started with a free plan, one exam, unlimited students. Later, we limited the free plan to one exam w/ 10 students and many of our clients jumped up to a paid plan.

I think if you do have a free plan, seriously limit features in a manner that encourages clients to upgrade.

[+] adamhowell|15 years ago|reply
The only thing I have to add to this discussion is that not having a free plan puts more pressure on your marketing pages.

You'll need to try that much harder to make sure your homepage, tour, etc. are as simple and straight-forward to understand as possible, because people won't be making up for where your marketing pages are lacking by signing up and trying things out for themselves.

[+] lleger|15 years ago|reply
Thanks for all the responses guys. We've decided to drop the free plan in light of the prescient advice herein.
[+] alexyim|15 years ago|reply
It's easier to switch from paid to free than otherwise.