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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 the guidance in our SaaS pricing book, Price to Scale, the answer depends largely on your product’s core value and user behavior. Here are some key points to consider:
• In our book, we discuss how a freemium model can shift product development to emphasize features that drive upgrades (see Page 137). This suggests that creating a deliberate gap in functionality—with essential features available for free and more advanced capabilities held back for paid plans—can effectively encourage users to convert.
• Limiting the number of team members in the free plan is another strategy that can create friction, nudging teams toward a paid model if collaboration is a major part of the value. However, if your product’s strength lies in fostering collaboration, limiting team members in the free plan might inhibit organic word-of-mouth and viral growth.
• The best approach generally is to align your limitations with your strategic goals. If your objective is to entice users by showcasing a robust, collaborative platform, you might lean toward feature limitations. On the other hand, if a team’s growing size is a significant value driver, then capping the number of free users might create a clear upgrade incentive.
In summary, our saas pricing book, Price to Scale, advises that you should test these options in the context of your specific product and market. Consider whether limiting team members or restricting premium features better reflects the value you deliver and the conversion path you want to create. The key is to experiment and closely monitor which approach drives the desired upgrade behavior while maintaining a compelling free experience.