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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 book, Price to Scale, here’s what you need to consider:
• Direct Answer
Eliminating your free tier can impact your ability to attract a broad set of leads and signups, particularly because free offerings often serve as a low-friction entry point. However, if you shift to a free trial or demo request model—especially one that uses a nominal fee—you can generate interest while filtering out less-serious users, potentially leading to a higher conversion rate.
• Key Insights from Price to Scale
- Our book highlights how many companies have moved away from pure free tiers. For instance, some SaaS companies charge a small fee ($7, for example) for trial plans. This nominal fee isn’t meant to be a barrier but rather a way to increase trial conversion rates by weeding out users who aren’t as committed.
- As noted in Price to Scale, free plans historically have conversion rates between only 2–6%, meaning high volumes of free users don’t always translate to effective revenue growth.
- In contrast, a well-designed free trial or demo request model can target more qualified prospects, easing the path to upgrade by clarifying the value of each tier up front.
• Practical Application
If your current audience relies heavily on the free tier for initial engagement, a sudden elimination might reduce your overall signup volume. However, if you reposition your offering with a trial or demo request model:
- Focus on clear, value-driven communication about what users gain in the trial phase.
- Structure the trial so it highlights the key features and benefits that encourage users to upgrade.
- Consider a nominal fee for the trial to signal value and ensure that the prospects are serious about converting, as our book discusses with real-world examples like those from Aftership.
• Summary Takeaway
Ultimately, the choice depends on your market, product complexity, and long-term revenue goals. Eliminating the free tier can potentially hurt overall lead volume, but when pushing a well-curated free trial or demo request model, you might achieve better-quality signups and a higher conversion rate. As always, ensure your messaging is clear so that potential customers understand the value at every stage of the funnel.
For more detailed guidance, please refer to the sections in Price to Scale that discuss trial conversion strategies and tier restructuring.