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Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
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Based on our saas pricing book, Price to Scale, the decision to offer a freemium rather than a free trial was carefully considered and ultimately proved to be the right call for our approach. Here’s a breakdown of our rationale and outcomes:
• Direct Answer:
We opted for a freemium model because it allowed us to build a larger user base and implicitly showcase value over a longer time period. We did not end up regretting this choice—on the contrary, it helped shape our product development and revenue strategy in a positive way.
• Key Considerations from Price to Scale:
- As discussed in our book (see page 137), the freemium model influenced our product development roadmap. By offering core features for free, we were able to entice users to upgrade to premium by continuously adding value to both tiers.
- The freemium approach helped us tap into a broader audience, especially in price-sensitive market segments. This aligns with our discussion on balancing average and marginal costs to enable more aggressive pricing strategies and cater to different customer segments.
- The decision was also about ensuring that our free offering was robust enough to generate engagement, while premium features provided clear additional value—this strategic balance proved effective for incremental revenue growth.
• Practical Application and Outcome:
- This approach not only boosted user acquisition but also provided a pathway for generating revenue from additional fees (like implementation, onboarding, and training), as highlighted in various sections of Price to Scale.
- By influencing the product roadmap, the freemium model ensured that our ongoing product improvements were geared toward converting free users into paying customers, creating a sustainable cycle of growth and revenue generation.
• Summary Takeaway:
Our experience, as detailed in Price to Scale, demonstrates that a well-thought-out freemium model can be more effective than a temporary free trial in driving long-term engagement and revenue growth. The key is to design the free tier carefully and balance it with compelling premium features. Ultimately, this approach aligned with our overall pricing and product strategy, and we consider it the right call for our SaaS business.