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Estd 4.22.2023
Below is a direct answer based on our saas pricing book, Price to Scale:
• Yes, there are alternative monetization strategies beyond simply converting free users into paid ones. Some companies have experimented with approaches like in-product ads, building marketplaces, or offering referral commissions. However, the book emphasizes that—even when exploring these models—they must be carefully aligned with your product’s core value.
• Our book stresses that a product-led approach thrives when users experience clear benefits directly from the product. Adding ads or external revenue channels risks distracting from the product’s inherent value if not executed seamlessly. In other words, while these tactics can provide additional monetization streams, they should never compromise the quality or focus of the user experience.
• For example, the discussion on freemium models (see sections on product development and pricing strategy) shows that the shift in product development was deliberately designed to entice free users to convert. This approach underscores that while supplementary channels (like referral commissions or even in-app marketplaces) might be viable, they need to be integrated in a way that they support—not detract from—the core product benefits that drive conversion.
• In practical terms, if you decide to explore alternative monetization:
- Test carefully. Ensure that any added ad or referral functionality complements your product without overwhelming it.
- Keep a close eye on key user engagement metrics, so you can immediately detect if these changes dilute the product experience.
- Align these initiatives with the product design, so they emerge naturally rather than feeling like an afterthought.
In summary, while there are ways to monetize a large pool of free users through ads, marketplaces, or referral programs, our book Price to Scale advises that they be implemented with caution so that the PLG focus on delivering outstanding product value remains front and center.