I would suggest that you don't call your free users "freeloaders". That's a pejorative term that suggests you're being taken advantage of. You offered your product for free, they took you up on the offer. It's fine that you've decided it's better for your business to cease offering the free tier, but it's unprofessional to use a pejorative to describe customers who accepted your offer of a free product.
Wow, this is the absolute wrong way to ditch a free plan. Holy shit!
The post comes off really condescending towards the beta users that helped get the product off the ground.
Sure, the business lessons are valid and helpful (despite being a complete regurgitation of advice espoused by people like Rob Walling and Patrick McKenzie), but IMO they don't belong in the same post that tells a cohort of your very first users:
"Yeah, we needed you in the beginning to test our idea and product, but now you're a burden. Get lost."
Grandfather your free plan beta customers in. It's the right thing to do. The free plan, IIRC, had a really low ceiling in the amount of data that could be collected--like 150 people or something silly.
Lessons for SaaS founders:
1.) Don't have a free plan.
2.) Don't set an expectation that there will be a free plan to get more early testers.
3.) Don't ever refer to any of your customers (free or not) like they're a number in a spreadsheet.
(Is it just me, or is the trak.io blog theme eerily similar to Signal v. Noise?)
It's not just in the freemium space either. I've seen companies use affiliate programs and low-ish prices in their early days, only to dump the affiliate program and price model after they have garnered enough success and momentum.
The pr they put out will chime about creating a sustainable business and it being good for the users. They will harp on how it's impossible to run the business without making the changes. Ideally, they try to play on guilt for haven given their userbase such a good deal or how bad affiliates had given them so much trouble.
They do not talk about the fact that the strategies they employed that helped them be successful early on weren't dumb "mistakes", but simply ways to get momentum. In other words, they were using the users to propel a business. The right thing to do is to reward your early users (and affiliates if that is the case). Making parts of your userbase out to be a 'freeloader' just exposes a certain mindset some entrepreneurs have toward their users.
Haha Thanks for the point of view - yeah it's a big splash but there was no hiding the fact so we just wanted to be totally transparent about it.
So far the replies from all our beta users has been exactly what we hoped for (expected), either "Thanks for the honesty" or "Cool, we were just checking it out, we're not in a position to need something like this now" or a few "Yeah screw you guys, delete my account I'm not using you anymore".
I understand a lot of your points, but I strongly disagree that we're regurgitating other peoples advice. This is taken exactly from our experiences.
And we're not telling anyone to get lost. We're explaining why we had to evolve and change our assumptions. If we carried the burden of every mistake we'd made as a startup, within a year we'd be so heavy we wouldn't be able to move anywhere!!!
(Oh and the blog theme is following a trend of about 20+ major startup blogs who switched to a typography led, single column design. We rebuilt the design a few months ago and tried to make it as much about the content as possible. I personally think the end goal was more like eerily similar to reading an eBook?)
To me it looks like the mistake it looks like you made wasn't offering a free product. It was offering ".. a super generous Free plan. A free plan so generous that an average funded startup would very rarely outgrow it.".
One reason for giving away free accounts is that lone hobby developers can very quickly become founders of rather bigger startups. These lone hobby developers are likely to only be interested in free - $9/month is a fairly big investment for someone just doing a hobby. The second it becomes a real business, on the other hand, that $9 is likely to look quite different. On a very note, I work for a pretty large organisation and have quite a lot of input in product choices. I also tinker around with stuff in my spare time. I definitely won't be paying you $9/month for my tinkering, and so I'll never get to know if it's something I'd want to recommend for consideration for my organisation. And I doubt I'm unique in this kind of position.
The trick is to make the free stuff only good enough for those people who would never pay for it anyway (allowing people who could become customers in the future a chance to get used to your product), and make stuff that would be critical to any real user - such as access to support, ability to support multiple users or whatever - only available to your paying customers. Otherwise, you run the risk of chasing off a lot of potential future business.
Google analytics was originally Urchin, and If I remember correctly it was 49.95 a month. I heard about it from a friend and started paying for it. A few months later Google bought them and it was suddenly free. It felt like picking a good stock and the feeling of going from paid to free was elating. I say this not as a well actually (ironically it is), but to support that if you have a good product people will pay and will recommend it to friends. Free is only good if the number of users on your platform is of benefit to you. In your case, I think it's not and you are probably making the right choice by focusing on both product development, with a little revenue on the side from the start (or at least early). Good luck.
Thanks for the deeper explanation into the history or Urchin, and also, that when it was a paid product you were still happy to recommend it. Thats exactly what we're hoping to get at Trak.io - yeah it's a paid product, but it brings a damn load more value to your business than the couple of bucks we're asking for a month.
Thanks for the good wishes too, I love how supportive HN can be!
I actually really miss the original Urchin. And server-log analytics in general, which is an area that's stagnated a lot in favour of tracking from the client.
I've respected the HN community for a long time. This was a place where ideas could be shared and unlike many sites that were just an echo-chamber for a particular point of view, things were debated here on a much higher, respectful level. Lately, however, if you don't 'fit' a particular worldview, comments are down voted instead of being debated.
Case in point. Here a company has provided insight into why they don't believe their product fits with the freemium model. This is so against dogma and current ideology that it's being down voted not on its merits but on the audacity to have a different opinion.
I think they are mostly being downvoted because they are apparently real dicks. This "I made a mistake so there is obviously a problem with you" attitude they display here and in the post in question shows a level of immaturity that puts them in the running for d-bag company of the year.
Yeah but the subtle wording in that CTA is "Try". We have a totally free, no credit card required, 30 day free trial :-) Something which I probably need to point out in my original article, my bad
"After introducing our $29 Priority Access program, offering Beta waiting list subscribers an instant queue jump, we started to see a huge shift in our customer development. Features that we’d previously emphasized because everyone said they were ‘cool’ no longer came up in conversations."
This "Priority Access Program" is pure genius for filtering and validation! I haven't seen that much outgoing method before but I sure believe it can work our great. Absolutely brilliant. Can you share your conversion rate for Priority Access? (PriorityAccessCount/QueueSize?)
We have a free plan, but its limited. Ours is a communications product (sococo.com) and the free plan supports a small number of simultaneous users. Paid plans increase that limit.
We track plans carefully. A certain fraction stays in the free plan, keeps using it regularly, and that's fine. But another predictable fraction moves up. We can pretty much tell which fraction that will be - there's a critical mass of usage that takes off.
So our free plan is a money maker - every month it grows our revenue stream. We'll never get rid of it.
Whether or not you should have a free plan really depends on your product.
In the case of trak.io, it's clear that the costs per user are too high for them to do it. Google Analytics can do it because it's backed by a big business and they can fund it. Many startups don't have this choice.
I'd just be wary of ditching a free plan. It's a great way to reach a lot of people with relatively little effort, just be careful you can support them with your business model.
Why not just start charging? If people can't live without
your app, won't they just buy it? I'm glad I read your blog;it reaffirmed an old saying. The more someone tries to
sell their product, or explain how brilliant they are--the
more skeptical I become. I don't know why this blog irritated me, but this company made it to HN; which just
might be better than charging the Free Loaders.
Everyone who was in the private Beta sees a "nagware" popup explaining our switch to a paid service, with options to also "Skip" and continue evaluating the product, or to email us to explain why they need a free plan
While this may work for some, be careful of listening to advice on the internet. I have read dozens of articles like this.
For us, to be totally honest, our conversion went way down when we introduced the 30-day trial. When we had a free plan (which we do again), our conversion was way higher, because I suppose it took >30 days for people to truly see the value in the product. So for us, a free plan is what worked best.
"Free users require the most support" is something I have experienced. A co-founder gave a free copy of our more-than-one-thousand-dollar software to a colleague, who gave it to one of her students, who pestered us about why it wouldn't work on his VM.
I originally found the free audio on a royalty free site. The video is very outdated now compared to the product, but at the time all we had were photoshop mockups of the UI and a vision! :D
Anyone who has used a mac before will spot that it's made from a ton of panning around images in iMove. Guilty as charged... :-P
I think this article has merit but it fails to consider that free users may eventually upgrade to a paying account.
Would it have been better to not offer a free plan to begin with? Instead have a 14 day money back guarantee with each plan. People with money and with intention will only use the product. If they don't like it they will probably ask for a refund but not many people actually do in reality because of the hassle.
[+] [-] gabemart|12 years ago|reply
[+] [-] liamgooding|12 years ago|reply
I understand your objection.
The term 'freeloader' was used because they're taking stuff for free with no expectation to pay anything in the future.
Also, an article that attracts discussion is a good thing, right? :)
[edited]
[+] [-] rsobers|12 years ago|reply
The post comes off really condescending towards the beta users that helped get the product off the ground.
Sure, the business lessons are valid and helpful (despite being a complete regurgitation of advice espoused by people like Rob Walling and Patrick McKenzie), but IMO they don't belong in the same post that tells a cohort of your very first users:
"Yeah, we needed you in the beginning to test our idea and product, but now you're a burden. Get lost."
Grandfather your free plan beta customers in. It's the right thing to do. The free plan, IIRC, had a really low ceiling in the amount of data that could be collected--like 150 people or something silly.
Lessons for SaaS founders: 1.) Don't have a free plan. 2.) Don't set an expectation that there will be a free plan to get more early testers. 3.) Don't ever refer to any of your customers (free or not) like they're a number in a spreadsheet.
(Is it just me, or is the trak.io blog theme eerily similar to Signal v. Noise?)
[+] [-] pknight|12 years ago|reply
It's not just in the freemium space either. I've seen companies use affiliate programs and low-ish prices in their early days, only to dump the affiliate program and price model after they have garnered enough success and momentum.
The pr they put out will chime about creating a sustainable business and it being good for the users. They will harp on how it's impossible to run the business without making the changes. Ideally, they try to play on guilt for haven given their userbase such a good deal or how bad affiliates had given them so much trouble.
They do not talk about the fact that the strategies they employed that helped them be successful early on weren't dumb "mistakes", but simply ways to get momentum. In other words, they were using the users to propel a business. The right thing to do is to reward your early users (and affiliates if that is the case). Making parts of your userbase out to be a 'freeloader' just exposes a certain mindset some entrepreneurs have toward their users.
[+] [-] liamgooding|12 years ago|reply
Haha Thanks for the point of view - yeah it's a big splash but there was no hiding the fact so we just wanted to be totally transparent about it.
So far the replies from all our beta users has been exactly what we hoped for (expected), either "Thanks for the honesty" or "Cool, we were just checking it out, we're not in a position to need something like this now" or a few "Yeah screw you guys, delete my account I'm not using you anymore".
I understand a lot of your points, but I strongly disagree that we're regurgitating other peoples advice. This is taken exactly from our experiences.
And we're not telling anyone to get lost. We're explaining why we had to evolve and change our assumptions. If we carried the burden of every mistake we'd made as a startup, within a year we'd be so heavy we wouldn't be able to move anywhere!!!
(Oh and the blog theme is following a trend of about 20+ major startup blogs who switched to a typography led, single column design. We rebuilt the design a few months ago and tried to make it as much about the content as possible. I personally think the end goal was more like eerily similar to reading an eBook?)
[+] [-] prof_hobart|12 years ago|reply
One reason for giving away free accounts is that lone hobby developers can very quickly become founders of rather bigger startups. These lone hobby developers are likely to only be interested in free - $9/month is a fairly big investment for someone just doing a hobby. The second it becomes a real business, on the other hand, that $9 is likely to look quite different. On a very note, I work for a pretty large organisation and have quite a lot of input in product choices. I also tinker around with stuff in my spare time. I definitely won't be paying you $9/month for my tinkering, and so I'll never get to know if it's something I'd want to recommend for consideration for my organisation. And I doubt I'm unique in this kind of position.
The trick is to make the free stuff only good enough for those people who would never pay for it anyway (allowing people who could become customers in the future a chance to get used to your product), and make stuff that would be critical to any real user - such as access to support, ability to support multiple users or whatever - only available to your paying customers. Otherwise, you run the risk of chasing off a lot of potential future business.
[+] [-] bitJericho|12 years ago|reply
[+] [-] SethMurphy|12 years ago|reply
[+] [-] liamgooding|12 years ago|reply
Thanks for the deeper explanation into the history or Urchin, and also, that when it was a paid product you were still happy to recommend it. Thats exactly what we're hoping to get at Trak.io - yeah it's a paid product, but it brings a damn load more value to your business than the couple of bucks we're asking for a month.
Thanks for the good wishes too, I love how supportive HN can be!
[+] [-] stormbrew|12 years ago|reply
[+] [-] pingburg|12 years ago|reply
Case in point. Here a company has provided insight into why they don't believe their product fits with the freemium model. This is so against dogma and current ideology that it's being down voted not on its merits but on the audacity to have a different opinion.
[+] [-] evgen|12 years ago|reply
[+] [-] watwut|12 years ago|reply
Saying "free plan turned out to be bad business decision, we can not really keep it" is one thing. Calling someone freeloader is another.
[+] [-] tigroferoce|12 years ago|reply
[+] [-] liamgooding|12 years ago|reply
Yeah but the subtle wording in that CTA is "Try". We have a totally free, no credit card required, 30 day free trial :-) Something which I probably need to point out in my original article, my bad
[+] [-] AhtiK|12 years ago|reply
This "Priority Access Program" is pure genius for filtering and validation! I haven't seen that much outgoing method before but I sure believe it can work our great. Absolutely brilliant. Can you share your conversion rate for Priority Access? (PriorityAccessCount/QueueSize?)
[+] [-] liamgooding|12 years ago|reply
I did a full write up (with data correct at that time) as a guest post on Sixteen Ventures blog:
http://sixteenventures.com/pre-launch-growth-hacking
TLDR: here's the slideshare version, much shorter:
http://www.slideshare.net/liamgooding/growth-hacking-prelaun...
[+] [-] JoeAltmaier|12 years ago|reply
We track plans carefully. A certain fraction stays in the free plan, keeps using it regularly, and that's fine. But another predictable fraction moves up. We can pretty much tell which fraction that will be - there's a critical mass of usage that takes off.
So our free plan is a money maker - every month it grows our revenue stream. We'll never get rid of it.
[+] [-] BerislavLopac|12 years ago|reply
[+] [-] microcolonel|12 years ago|reply
Users can be valuable without offering net revenue on their own, this is how Github stays afloat, it's at the core of their business model.
[+] [-] liamgooding|12 years ago|reply
[+] [-] nsxwolf|12 years ago|reply
[+] [-] jwblackwell|12 years ago|reply
In the case of trak.io, it's clear that the costs per user are too high for them to do it. Google Analytics can do it because it's backed by a big business and they can fund it. Many startups don't have this choice.
I'd just be wary of ditching a free plan. It's a great way to reach a lot of people with relatively little effort, just be careful you can support them with your business model.
[+] [-] marincounty|12 years ago|reply
[+] [-] liamgooding|12 years ago|reply
Everyone who was in the private Beta sees a "nagware" popup explaining our switch to a paid service, with options to also "Skip" and continue evaluating the product, or to email us to explain why they need a free plan
[+] [-] borski|12 years ago|reply
For us, to be totally honest, our conversion went way down when we introduced the 30-day trial. When we had a free plan (which we do again), our conversion was way higher, because I suppose it took >30 days for people to truly see the value in the product. So for us, a free plan is what worked best.
[+] [-] danielweber|12 years ago|reply
[+] [-] robobro|12 years ago|reply
[+] [-] andrew_wc_brown|12 years ago|reply
[+] [-] liamgooding|12 years ago|reply
I originally found the free audio on a royalty free site. The video is very outdated now compared to the product, but at the time all we had were photoshop mockups of the UI and a vision! :D
Anyone who has used a mac before will spot that it's made from a ton of panning around images in iMove. Guilty as charged... :-P
[+] [-] unknown|12 years ago|reply
[deleted]
[+] [-] notastartup|12 years ago|reply
Would it have been better to not offer a free plan to begin with? Instead have a 14 day money back guarantee with each plan. People with money and with intention will only use the product. If they don't like it they will probably ask for a refund but not many people actually do in reality because of the hassle.
[+] [-] spacesword|12 years ago|reply