.png)
Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Based on our saas pricing book, Price to Scale, PLG companies should consider both approaches—but lean toward a freemium model when the product's economics and customer behavior support incremental value and upsell opportunities.
Here’s a breakdown of the key points from Price to Scale:
• Freemium as an adoption driver:
- The book highlights how freemium models not only drive massive user adoption but also influence product development. Teams are encouraged to build features that entice free users to upgrade, which can lead to an expanding customer base and incremental revenue gains.
- Examples like Amplitude show that having a free plan, in addition to premium tiers, can effectively segment the market and cater to different customer sizes.
• Generous free trials as an alternative:
- While generous free trials are valuable to let users experience a product's full functionality, they tend to be a short-term engagement. This may work well when the product’s value is best demonstrated in its complete form, but might not build the continuous user engagement that freemium models foster.
- Free trials can sometimes lead to a “try before you buy” dynamic, where the urgency to convert may be less compelling if the product’s core value isn’t continually reinforced post-trial.
• Considerations for PLG companies:
- The choice largely depends on your product’s marginal cost, the competitive landscape, and the type of customers you are targeting. Products with low marginal costs and broad appeal often benefit more from a freemium model.
- On the other hand, if your product requires a deeper feature experience to demonstrate its value, a generous free trial might be more appropriate to convert highly interested users.
Summary:
Our pricing strategy book, Price to Scale, suggests that while both approaches can drive adoption, a freemium model is particularly potent for PLG companies looking to scale through continuous engagement and product-driven upsells. However, if your product demands an immersive initial experience to showcase its value, consider balancing your approach with a generous free trial option. Ultimately, aligning your strategy with customer behavior and product economics is key.