Why we ditched our free plan

http://blog.trak.io/freemium-vs-free-why-we-ditched-our-free-plan/

by PhilipA • 12 years ago

92 54 12 years ago

blog.trak.io

As the saying goes, if a product is free then you are the product. In other words, if you can't sell your users, you have to charge them.

liamgooding15• 12 years ago

microcolonel2• 12 years ago

Of course, in simplifying it this far, you run the risk of losing some subtleties of the situation.

Users can be valuable without offering net revenue on their own, this is how Github stays afloat, it's at the core of their business model.

liamgooding15• 12 years ago

Interesting point on Github!

In their case, it's like "Free for when you'r working on your own personal passion stuff, but it's paid when you go into the office and hack on your companies private code". The huge community and discussion is essentially a massive funnel, users already have an account, etc.

There's actually some potential parallels with Trak.io and I'm definitely going to keep Github on my whiteboard as a reminder why Freemium can work if you're a tool aimed at developers

SethMurphy• 12 years ago

Google analytics was originally Urchin, and If I remember correctly it was 49.95 a month. I heard about it from a friend and started paying for it. A few months later Google bought them and it was suddenly free. It felt like picking a good stock and the feeling of going from paid to free was elating. I say this not as a well actually (ironically it is), but to support that if you have a good product people will pay and will recommend it to friends. Free is only good if the number of users on your platform is of benefit to you. In your case, I think it's not and you are probably making the right choice by focusing on both product development, with a little revenue on the side from the start (or at least early). Good luck.

liamgooding15• 12 years ago

Hey Seth, original author here.

Thanks for the deeper explanation into the history or Urchin, and also, that when it was a paid product you were still happy to recommend it. Thats exactly what we're hoping to get at Trak.io - yeah it's a paid product, but it brings a damn load more value to your business than the couple of bucks we're asking for a month.

Thanks for the good wishes too, I love how supportive HN can be!

stormbrew• 12 years ago

I actually really miss the original Urchin. And server-log analytics in general, which is an area that's stagnated a lot in favour of tracking from the client.

gabemart• 12 years ago

I would suggest that you don't call your free users "freeloaders". That's a pejorative term that suggests you're being taken advantage of. You offered your product for free, they took you up on the offer. It's fine that you've decided it's better for your business to cease offering the free tier, but it's unprofessional to use a pejorative to describe customers who accepted your offer of a free product.

liamgooding15• 12 years ago

Hey Gabemart, original author here.

I understand your objection.

The term 'freeloader' was used because they're taking stuff for free with no expectation to pay anything in the future.

Also, an article that attracts discussion is a good thing, right? :)

[edited]

nodata• 12 years ago

It's probably not a good idea to reply to people giving you useful feedback by telling them they are "dramatizing".

edanm• 12 years ago

Just wanted to note that I also disliked that term.

And believe me, I couldn't agree with the article more, I was nodding my head vigorously throughout my reading, I bookmarked the article to Evernote as a reference for anyone I talk to about this in the future (and I talk about this with a lot of people, making exactly your arguments).

So I couldn't be more "pro", but I also immediately thought "freeloader is not a nice term". It could just be my "the internets will hate this" spidey-sense, but in this case I think the internets are right - it really is an offensive term in more places.

jpeg_hero• 12 years ago

I like you using the term freeloader ... I get it, you're pushing people to think in a different way. Ignore this stick in the MUDs :) great article.

AhtiK2• 12 years ago

So we are all 'freeloaders' at HN, right? :)

'freeloader' is a subjective term with emphasis on negative: "someone who is a waste of air and takes up valuable space on the planet earth" [1].

But I sure understand the need to be provocative. Also if you are not trying to convert free users into paying then feel free to insult them. If trying to convert them to paying customer then it pays to play nice :-)

Imagine sending e-mail "Hey freeloader, start paying so we can build a valuable product or go away" vs "Hey user. Just wanted to let you know that we thrive to build a valuable product that makes the best sense for you. At the same time it has become hard to manage free user needs together with the needs of premium tier customers. I invite you to upgrade to paid plan to enjoy all the extra magic. Your input has been invaluable and here's a xx discount valid for 1 week. Let me know if you need more time to decide."

[1] http://www.urbandictionary.com/define.php?term=freeloader

berkay• 12 years ago

An article attracts discussion is good? sure. I did not know about trak.io, now I do. The attitude in the article towards "freeloaders"? not so good. I won't argue whether it is better or not to have a freemium for "your" company. But commitment should not be broken so nonchalantly. Did you at least grandfather beta customers to a free plan? If not, you did a bait and switch, and that does not make me wanna do business with you (and I would have become a paying customer).

rsobers3• 12 years ago

The term 'freeloader' was used because they're taking stuff for free with no expectation to pay anything in the future.

You set this expectation yourself by offering a free plan, no?

andrew_wc_brown• 12 years ago

They're splash video has the same chords as Wrecking Ball.

liamgooding15• 12 years ago

hehe you won the internet for spotting that! :D

I originally found the free audio on a royalty free site. The video is very outdated now compared to the product, but at the time all we had were photoshop mockups of the UI and a vision! :D

Anyone who has used a mac before will spot that it's made from a ton of panning around images in iMove. Guilty as charged... :-P

jwblackwell• 12 years ago

Whether or not you should have a free plan really depends on your product.

In the case of trak.io, it's clear that the costs per user are too high for them to do it. Google Analytics can do it because it's backed by a big business and they can fund it. Many startups don't have this choice.

I'd just be wary of ditching a free plan. It's a great way to reach a lot of people with relatively little effort, just be careful you can support them with your business model.

AhtiK2• 12 years ago

"After introducing our $29 Priority Access program, offering Beta waiting list subscribers an instant queue jump, we started to see a huge shift in our customer development. Features that we’d previously emphasized because everyone said they were ‘cool’ no longer came up in conversations."

This "Priority Access Program" is pure genius for filtering and validation! I haven't seen that much outgoing method before but I sure believe it can work our great. Absolutely brilliant. Can you share your conversion rate for Priority Access? (PriorityAccessCount/QueueSize?)

liamgooding15• 12 years ago

Thanks!

I did a full write up (with data correct at that time) as a guest post on Sixteen Ventures blog:

http://sixteenventures.com/pre-launch-growth-hacking

TLDR: here's the slideshare version, much shorter:

http://www.slideshare.net/liamgooding/growth-hacking-prelaun...

luckystrike• 12 years ago

Could you please remove the obnoxious photo of the woman's ass on Slide #5? You can probably spread the "Our product is sexy" message in a much better way.

These kind of images make a lot of females in the programming community feel uncomfortable and it's better if we don't have them in any work related presentations.

tigroferoce• 12 years ago

Do you realise that in the upper right corner of the page you linked there a link titled "Try Track.io For Free"?

liamgooding15• 12 years ago

Original author here.

Yeah but the subtle wording in that CTA is "Try". We have a totally free, no credit card required, 30 day free trial :-) Something which I probably need to point out in my original article, my bad

rhizome• 12 years ago

It sounds like you're making a lot of mistakes from not thinking things through. Do you really care about your business?

username223• 12 years ago

subtle wording in that CTA

That kind of attitude doesn't exactly inspire trust. I had never heard of you before reading this article, and I'll never use you after. Good job.

marincounty• 12 years ago

Why not just start charging? If people can't live without your app, won't they just buy it? I'm glad I read your blog;it reaffirmed an old saying. The more someone tries to sell their product, or explain how brilliant they are--the more skeptical I become. I don't know why this blog irritated me, but this company made it to HN; which just might be better than charging the Free Loaders.

liamgooding15• 12 years ago

We do charge now.

Everyone who was in the private Beta sees a "nagware" popup explaining our switch to a paid service, with options to also "Skip" and continue evaluating the product, or to email us to explain why they need a free plan

rsobers3• 12 years ago

Wow, this is the absolute wrong way to ditch a free plan. Holy shit!

The post comes off really condescending towards the beta users that helped get the product off the ground.

Sure, the business lessons are valid and helpful (despite being a complete regurgitation of advice espoused by people like Rob Walling and Patrick McKenzie), but IMO they don't belong in the same post that tells a cohort of your very first users:

"Yeah, we needed you in the beginning to test our idea and product, but now you're a burden. Get lost."

Grandfather your free plan beta customers in. It's the right thing to do. The free plan, IIRC, had a really low ceiling in the amount of data that could be collected--like 150 people or something silly.

Lessons for SaaS founders: 1.) Don't have a free plan. 2.) Don't set an expectation that there will be a free plan to get more early testers. 3.) Don't ever refer to any of your customers (free or not) like they're a number in a spreadsheet.

(Is it just me, or is the trak.io blog theme eerily similar to Signal v. Noise?)

liamgooding15• 12 years ago

Hey, original author here.

Haha Thanks for the point of view - yeah it's a big splash but there was no hiding the fact so we just wanted to be totally transparent about it.

So far the replies from all our beta users has been exactly what we hoped for (expected), either "Thanks for the honesty" or "Cool, we were just checking it out, we're not in a position to need something like this now" or a few "Yeah screw you guys, delete my account I'm not using you anymore".

I understand a lot of your points, but I strongly disagree that we're regurgitating other peoples advice. This is taken exactly from our experiences.

And we're not telling anyone to get lost. We're explaining why we had to evolve and change our assumptions. If we carried the burden of every mistake we'd made as a startup, within a year we'd be so heavy we wouldn't be able to move anywhere!!!

(Oh and the blog theme is following a trend of about 20+ major startup blogs who switched to a typography led, single column design. We rebuilt the design a few months ago and tried to make it as much about the content as possible. I personally think the end goal was more like eerily similar to reading an eBook?)

rsobers3• 12 years ago

Why don't you grandfather in your current free users and shut off the plan? That seems totally fair.

At present, it seems like bait and switch. You say it yourself in the post:

"One of the most prominent details we emphasized to everyone we spoke to in the early days of Trak.io was that we would offer a super generous Free plan."

So you got people to try and test your product based on this attractive premise, and now the ones who are perhaps too early stage to switch to a paid plan are stuck. With an analytics app, switching costs are pretty high.

Of course you have the ability to iterate, increase prices, etc.--and you should--I just think it should be done with a little more tact.

pknight• 12 years ago

This happens so often.

It's not just in the freemium space either. I've seen companies use affiliate programs and low-ish prices in their early days, only to dump the affiliate program and price model after they have garnered enough success and momentum.

The pr they put out will chime about creating a sustainable business and it being good for the users. They will harp on how it's impossible to run the business without making the changes. Ideally, they try to play on guilt for haven given their userbase such a good deal or how bad affiliates had given them so much trouble.

They do not talk about the fact that the strategies they employed that helped them be successful early on weren't dumb "mistakes", but simply ways to get momentum. In other words, they were using the users to propel a business. The right thing to do is to reward your early users (and affiliates if that is the case). Making parts of your userbase out to be a 'freeloader' just exposes a certain mindset some entrepreneurs have toward their users.

JoeAltmaier• 12 years ago

We have a free plan, but its limited. Ours is a communications product (sococo.com) and the free plan supports a small number of simultaneous users. Paid plans increase that limit.

We track plans carefully. A certain fraction stays in the free plan, keeps using it regularly, and that's fine. But another predictable fraction moves up. We can pretty much tell which fraction that will be - there's a critical mass of usage that takes off.

So our free plan is a money maker - every month it grows our revenue stream. We'll never get rid of it.

nsxwolf• 12 years ago

Charging money is an awesome business model.

pingburg• 12 years ago

I've respected the HN community for a long time. This was a place where ideas could be shared and unlike many sites that were just an echo-chamber for a particular point of view, things were debated here on a much higher, respectful level. Lately, however, if you don't 'fit' a particular worldview, comments are down voted instead of being debated.

Case in point. Here a company has provided insight into why they don't believe their product fits with the freemium model. This is so against dogma and current ideology that it's being down voted not on its merits but on the audacity to have a different opinion.

evgen• 12 years ago

I think they are mostly being downvoted because they are apparently real dicks. This "I made a mistake so there is obviously a problem with you" attitude they display here and in the post in question shows a level of immaturity that puts them in the running for d-bag company of the year.

liamgooding15• 12 years ago

Seems a harsh, unfair and hasty assessment considering you've never met anyone in our team or spoken to any of our users.... :-/

watwut• 12 years ago

I think that problem is not removing free option. The problem is attitude to those free users. There was no reason to call them "freeloaders".

Saying "free plan turned out to be bad business decision, we can not really keep it" is one thing. Calling someone freeloader is another.

borski• 12 years ago

While this may work for some, be careful of listening to advice on the internet. I have read dozens of articles like this.

For us, to be totally honest, our conversion went way down when we introduced the 30-day trial. When we had a free plan (which we do again), our conversion was way higher, because I suppose it took >30 days for people to truly see the value in the product. So for us, a free plan is what worked best.

prof_hobart• 12 years ago

To me it looks like the mistake it looks like you made wasn't offering a free product. It was offering ".. a super generous Free plan. A free plan so generous that an average funded startup would very rarely outgrow it.".

One reason for giving away free accounts is that lone hobby developers can very quickly become founders of rather bigger startups. These lone hobby developers are likely to only be interested in free - $9/month is a fairly big investment for someone just doing a hobby. The second it becomes a real business, on the other hand, that $9 is likely to look quite different. On a very note, I work for a pretty large organisation and have quite a lot of input in product choices. I also tinker around with stuff in my spare time. I definitely won't be paying you $9/month for my tinkering, and so I'll never get to know if it's something I'd want to recommend for consideration for my organisation. And I doubt I'm unique in this kind of position.

The trick is to make the free stuff only good enough for those people who would never pay for it anyway (allowing people who could become customers in the future a chance to get used to your product), and make stuff that would be critical to any real user - such as access to support, ability to support multiple users or whatever - only available to your paying customers. Otherwise, you run the risk of chasing off a lot of potential future business.

bitJericho• 12 years ago

Zarafa springs to my mind.

notastartup• 12 years ago

I think this article has merit but it fails to consider that free users may eventually upgrade to a paying account.

Would it have been better to not offer a free plan to begin with? Instead have a 14 day money back guarantee with each plan. People with money and with intention will only use the product. If they don't like it they will probably ask for a refund but not many people actually do in reality because of the hassle.

spacesword• 12 years ago

They have a 30 day free trial still.

robobro• 12 years ago

This is an advertisement.

danielweber• 12 years ago

"Free users require the most support" is something I have experienced. A co-founder gave a free copy of our more-than-one-thousand-dollar software to a colleague, who gave it to one of her students, who pestered us about why it wouldn't work on his VM.

Why we ditched our free plan

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