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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 pricing strategy in Price to Scale, the key is to design your freemium experience to naturally encourage collaboration while protecting core premium value. Here’s how to do that:
Direct users to see the benefit of expanding their network:
• Build core collaborative features into the paid plans while offering limited, essential functionalities in the free tier. This lets freemium users invite colleagues to try the platform without unlocking premium collaboration benefits immediately.
• For instance, you might allow users to add a set number of colleagues to demonstrate teamwork, but reserve deeper integrations and advanced features for paid accounts.Leverage marginal value without oversharing:
• As discussed in our book, keeping a close eye on both average and marginal costs is essential. Designing your freemium model so that the incremental value of each added contact or feature is clearly tied to potential revenue in the paid tier strikes the right balance.
• Consider using a “pricing per contacts” approach, where the invitation itself becomes a signal for lead generation. This way, when a user benefits from inviting colleagues, the model still ensures that increased usage aligns with eventual value capture.Incentivize thoughtful invitations:
• Rather than blanket invitations that give away too much for free, use a structured approach where freemium users are provided with tangible rewards for inviting colleagues—such as bonus credits, temporary access to a premium feature, or an enhanced trial period for seeing the full collaborative features in action.
• This encourages spreading the word without compromising the value proposition of your paid plans.Align product development with pricing strategy:
• Our saas pricing book emphasizes that any shift in product development (as seen with successful freemium models) should be accompanied by a clear segregation of free versus premium features. This encourages the transition from freemium to paid without diluting the premium value.
In summary, the strategy is to design a freemium model that offers just enough value to attract collaboration and invites while intentionally gating premium features to encourage an upgrade. This approach not only fuels organic growth but also maintains the perceived value of the paid offerings.