

Why we dropped our free plan - gtzi
https://medium.com/p/bfab146c47c8

======
powertower
I think the real parts in these stories are -

1\. Have free plan to pick up 10x more users (and gain more traction,
exposure, feedback, etc).

2\. When the time is right, remove free plan to convert some of those users.

The rest is just b.s. to justify a perfectly good strategy to those free users
and the rest of the market. Which is b.s. in itself (...thinking you have to
justify it with b.s.).

But it was so well done here that you kind of have to admire it.

Gaining H.N. exposure for a day, and getting picked up on some other sites is
also not too bad.

~~~
pstack
I like to think of it as a modified version of the thing where businesses
start out doing shady stuff and then suddenly go legit and everything is just
okay. Think Napster, for example. They built their audience and popularity and
business on facilitating the sharing of other people's copyright and then they
go legitimate. They would never have been able to build their business being
legitimate from the start, though. And once you go legitimate, everyone
forgets that you essentially built your "Ford dealership" by stealing the
Ford's from the other Ford dealerships in your town, until you could make
enough money off their products to go legitimate and open up your own honest
Ford dealership.

Granted, this isn't that extreme, but it reminds me of it.

------
basicallydan
Really good points, Nikos.

At Huddle we faced this issue a few years ago and ended up dropping our free
package. Especially for businesses, there's often just no point in trying to
support free users. In the long run, everybody has done better for it.

There is one type of user you might not have considered yet, though:
Charities.

We started the Huddle Foundation [0], which provides free accounts to Non-
Profits, for up to 25 users. They get all the standard features that Huddle
provides (in other words, everything except advanced customisation which is
really just visual stuff). We do it through a company called TechSoup.

I recommend you look into something like this, because most charities really
don't need to be spending money on stuff like this. It's better and more
useful for them if they stick with one platform instead of hopping from one to
the other to the other as free trials run out. You'd probably be a hero in
many charity recruiters' eyes :)

[0]: [http://www.huddle.com/foundation/](http://www.huddle.com/foundation/)
[1]: [http://www.techsoup.org/](http://www.techsoup.org/)

~~~
diminish
Elimination of free users and giving free accounts to non-profits, remind me
of Google Apps.

OP's and your cases are a case for Google's elimination of 'free' users on
Google Apps etc, isn't it?

~~~
basicallydan
Possibly, I suppose. I naturally can't speak for Google but I wouldn't be
surprised if they did it for the same reasons.

------
agibsonccc
Free plans tend to be cancerous. Users who subscribe to free plans are usually
90% of your support requests. The customers who actually see value in what you
do tend to not only be the best to work with, but also tend to foster mutual
win relationships. As has been stated, it's also a good filter for getting
users you're solving a real pain for.

Edit: Since what I said appears to be a bit controversial, maybe I need to
clarify a bit. Free plans are great for getting users initially and to test a
product, but there are serious tradeoffs to consider if you're looking to get
revenue. Not every business is built on top of the idea of accumulating users
---> raise VC ----> exit.

For most people who want to build a business with even just modest revenues
and stay bootstrapped, paying users really are your best bet, since it proves
value in what you're doing. People only have finite resources, so it might as
well be spent on people who value your services enough to pay for them.

------
dhimes
_Don’t look for evangelists among the people who think your product isn’t
worth $19_

This quote from the post serves as a great TL;DR

------
girvo
Some excellent points in this! My current startup will not have a free tier at
all for this reason, but it will have an open source core (despite being built
from the ground up aside from some MIT licensed libraries) -- I think this is
a great compromise. Techies that have more free time than cash (I fit into
this niche a few years back) can often be your greatest evangelists, and the
friction of running your own server for it keeps a lot of the low-value
customers out.

Thoughts about that strategy?

~~~
basicallydan
This strategy isn't just for techies with more free time than cash. It's also
for the techies who work for companies where security is a _really big_ issue.
Companies who, for one reason or another, simply cannot store some of their
data offsite or delegate that responsibility to third parties.

We have our own GitHub server (read: actual deployment of GitHub, on our local
network, because we just like GitHub), which requires a license to use. The
benefit is that we are in control of keeping our own stuff private. This is
important for some of our customers. And of course we don't fall apart because
GitHub is having an issue.

There's real potential for "the Cloud" as a concept to lose a bit of trust in
the wake of the PRISM revelations so having letting people deploy your
software to their own "Private Cloud" could be very welcome.

NB: We do also have our own public GitHub account too for our open-source
stuff, with some private repos for when we need to work with third-parties.

~~~
girvo
Ah yeah, that's the other reason, but we'll be doing that for a price with
proper support for the companies that need it. It's a financial service, so
this will be a big part of our business I believe. The open core is a happy
byproduct of it :)

------
nomedeplume
I think your prices are too low. $19/month for a job? Recruiters make e.g.
$20,000 for a placement. Who are you selling to? I am just so skeptical of
$19/month, can it really be providing value?

~~~
moraitakis
Recruiters charge for their ability to bring you top quality candidates (they
help you attract and select people). We sell software to manage the recruiting
process. It's not one or the other.

Think for example accounting software and tax advisory services. You'd get
both and the second would be far more expensive than the first.

------
dtjohnnymonkey

      It forces an honest decision. Will I really get value out of this product,
       enough to justify paying for it? If someone is not getting $19 worth of value out of Workable,
      then we’re not solving a real problem they have.
    

This is one of my favorite reasons to charge for a product. It's a service to
the people who decide to not use your product because it helps them reduce
their app clutter. Some people will sign up for things because they are free.

------
aviraldg
Good points, but the reason behind having a free tier is not to offer a good
experience for free, but to eliminate the initial friction of using a payment
mechanism so that a user can actually try a product before committing to it.

~~~
dtjohnnymonkey
A workaround is to offer a refund if the user is not satisfied. I wonder how
many sign ups would be lost to people who purely just do not want to enter
payment info (vs users who don't want to commit).

~~~
stratosvoukel
Not having a free plan does not mean you cannot have a free trial which does
not require entering payment info!

~~~
Ecio78
actually they have a free trial, but I think they should edit the main page
according to it: there's a "create a free account" call to action button in
the main page, but actually it will lead you to a 15 days trial (as stated in
the Pricing page). Maybe they can use a more clear statement also in the home
page, instead of "no credit card required" use "no credit card required - 15
days free trial".

------
KCDz
1\. Get free users

2\. Cut free service, converting some users

3\. Make a condescending blog post and fire it at HN for publicity.

~~~
covgjai
This sounds good. Let me try this in my upcoming startup.

------
wiseleo
I don't have a free plan, but I offer a very generous reward for referring new
customers. Some people may in fact never pay me or they may pay me but receive
more money back from me.

* Everyone starts with 5 free transactions and test transactions do not count.

* If they were referred to me, they get an additional 5 transactions for free.

* After they use up those 10 total initial transactions and pay for credits, the original referrer gets 5 transactions for free, once, and 20% of what the person they referred paid me. This referral arrangement continues for a long time.

* I integrate the product into every customer's website for free to eliminate the friction of them not knowing how to do it. It's much easier to do a quick remote login than to educate customers how to do it.

* You can sign up to use my product by SMS. No credit cards required.

* I don't prevent a customer from using the product when they have zero credits. They simply don't get the product until they pay. However, I never change the end user experience.

* I don't charge a monthly fee and I don't charge for maintaining a mobile landing page, for which competitors charge.

For many customers, that initial 10 free transactions is all they will ever
need. My technology quietly sits on their website and credits them for their
passive referrals for clicks on my widget.

Due to the nature of my product, charging a monthly fee does not make much
sense. The usage spikes and is difficult to predict. It made more sense to
charge per transaction.

I am not sure I agree with the statement that you will not find evangelists
among your free users. I don't pay for Apigee, Appery, Salesforce or BizSpark.
I pay a modest amount to Twilio. I will talk your ear off about how great
these and many other companies are.

------
oblio
I don't get it: [http://workable.com/](http://workable.com/) &
[http://workable.com/signup](http://workable.com/signup)

Have you not deployed it or just reverted?

~~~
moraitakis
We still have a free trial for 15 days, as we always did. But no free plan.

~~~
oblio
Then please say so anywhere on the first page OR the signup page. There's no
"trial" or "expiring" mentioned anywhere I can see...

~~~
moraitakis
You're right that the button in the main page is outdated and perhaps gives
the wrong idea.. but if you go to
[http://workable.com/pricing](http://workable.com/pricing) it clearly says
"try it free for 15 days" and has a big box underneath explaining how the free
trial works :)

~~~
netrus
So - don't you want to fix it?

Saying the limitation is mentioned somewhere on the page is a little lame.

~~~
moraitakis
Of course we will, just saying that it was not intentional. In most places it
is mentioned (there is a signup button on the pricing page and at the bottom
of each page which says 15-day trial) but we didn't notice that in some other
places the button text can be misinterpreted.

------
gingerlime
Excellent points and I agree with pretty much everything being said. One
niggling question however is how to introduce people to the product? typically
this involves a limited trial. The limited-trial version ends up having the
same issues as the freemium one.

You still have to support non-paying trial users, you still need to think
about features which go on paid vs. trial plans. Then the only difference
becomes the _volume_ of users? Or do you think people have fundamentally
different expectations from a trial than from a freemium product?

------
znmeb
I keep seeing this article or variations on it over and over. The question I
have is, "Why did they _ever_ have a free version?" Why does DropBox have a
free tier? GMail? Why do Canonical, Red Hat and SUSE give away thousands of QA
person-hours and more thousands of server hours on community Linux distros?
Why are the complicated pieces of software that are browsers mostly free?

~~~
dpatru
It is cheaper to make copies of software than almost anything else. This means
that building network or a large customer base is very cheap, almost free.
What prevents you from building a large customer base is not costs, but lack
of demand and artificial barriers like charging a price. If you can make money
by selling access to a large customer base, then it makes sense to go that
route and remove every barrier to mass adoption.

Google does not have to work hard to sell its products. People are happy to
use its search functions for free. And advertisers are happy to pay to access
searchers. If Google charged for search, then it would have to work hard to
sell paid search in the face of free alternatives. It would lose users and
thus have less to sell to its advertisers. It's just easier from a marketing
and business perspective to keep search free, or even pay people to search,
and then charge for access to searchers.

------
happywolf
I remember Patio11 (Patrick McKenzie) made similar claim on this: charge the
customer, and in fact, don't afraid to charge more. If my memory is right he
talked about this in a conference, but too bad I don't have the link handy. If
any of you can share, it will be great.

~~~
patio11
I've made directionally similar statements on more occasions than I can
remember, so I'd have difficulty giving you a particular link unless you had a
more specific claim or anecdote that I was referencing.

~~~
happywolf
I found it, good read indeed.

[http://www.kalzumeus.com/2013/04/24/marketing-for-people-
who...](http://www.kalzumeus.com/2013/04/24/marketing-for-people-who-would-
rather-be-building-stuff/)

------
jusob
There can be advantages to have a limited free plan. I offer limited free
plans for 2 main reasons:

* users can make sure they like the service before paying for it. This avoids costly refunds

* users can integrate our API and doing tests without having to pay for it. It makes for a better experience, as they don't feel they are paying for missing documentation or limited libraries.

If you make the free plan useful as a trial, this can be a win-win. With my
service, I see people using the free plan as a trial only: after a few days
they pay for it, or they stop using the service.

I also use my free users for posting Tweets and other social sharing.

------
costapopescu
The thing about free plan is that most of the users are freebie seekers and
have no intention of getting an upgrade. And talking about B2B, if companies
can't afford $19/m, then they shouldn't be in business.

------
frozenport
Another factor that you should address is competition. If your market offers a
free product you cannot afford to have a pay only product. Examples include
free products like radio streaming, email, or even online taxes.

~~~
chestnut-tree
_" If your market offers a free product you cannot afford to have a pay only
product"_

Is this really the case? If you provide a pay-only product over a competitor
who offers it for free, surely you have to sell the benefits of your paid
product over the free one? You have to convince users that paying for your
product gives them a better service or experience than the free alternative.

To take the example of email, there are many paid-for email services (e.g.
fastmail) despite the fact that the market is dominated by free players such
as Microsoft, Yahoo! and Google.

An alternative to the free service is the free trial. It won't attract the
free users, but it might encourage paying customers who want to try-before-
they-buy.

------
crorella
Read Lean Analytics, there is a good example of a company offering the exact
same service, look at what they did.

