Ask HN: Is a free plan worth it or not? Trying to figure out our pricing
Hey HN,
We (me and lleger) are Supportbreeze, and we're trying to figure out our plans for our launch next week. Our major contention is concerning free plans. We're debating whether or not we want to offer free plans at all. On one side, we see the value of offering a free plan: great entry vector, good promotional value, something that our competitors don't have, etc. However, on the other hand, we don't quite see the usefulness of a free plan on a business app, considering all plans come with a 30 day free trial and that it would affect the rest of our plans. We're concerned that it's a sinkhole that won't have any real benefit.
The main thing we think we'd lose by nixing the free plan is the influx of people that will simply start using our app instead of ignoring it if it were paid-only. Knowing that at some point they will need to start paying, is a trial enough enticement to sign up?
What are your thoughts? Should we abandon the free plan in light of our free trial period? Are free plans absolutely necessary, even for business apps? Thanks all!
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Sounds like a BtoB venture. Who are your target clients? If they're well funded/profitable/high end then all you need is the 30 day refund program. If they're bootstrapped start-ups who need to pinch every dime then a limited free account is necessary and then aim for the up-sell.
I struggled with this question myself as all the advice I got was for there to be a free account. You know what? I don't like free. It doesn't make sense in business. It may work with Youtube (ad sponsored and still loses a boatload of money but G has deep pockets) but we've seen many who tried free ended up going paid or free and limited (Hootsuite just recently). There may be nothing worse for your business than going paid and limiting what people had come to expect for free (seen this time and again).
Besides, people take advantage of free. They demand support and effort with nothing in return. If you fail to support them well you risk a bad rep. A bad rep will sink your business. However, if you are paid from the start, turn out a great product, and support your clients well, you'll earn a great rep which in turn builds your business.
Go with paid from the start and have a 30 day refund policy. That way people can try it all out, you can find out exactly what their needs are support-wise, and if any ask for the refund to leave you will know exactly why and can address those issues.
It's time to end "free".
My margins are always really tight. I rarely part with money willingly.
When crossbrowsertesting.com announced their launch a while back, I used their free service just enough to become convinced that supporting them was worth the monthly charge; I've been a paid user ever since, even though I only use it occasionally.
So, I think that if you offer a compelling service, something that provides more value to your customers than it costs them, then a free plan should pretty much only be considered a "demo" of your service. If you've got a good product, then even misers like me will pay for it.
edit: Oh, and also: for a service I'm working on right now, I've decided to use "early adopter" pricing. It works like this: pricing starts at $X / month; for every new subscriber, all previous subscribers receive a $.01/month discount. If or when the monthly prices ever drop, it will drop by the same amount for all subscribers. So, the sooner someone signs up, the sooner they'll get the service for $5/month -- or even free. I don't know if it'll work, but there it is.
In all honesty, if you don't have a free plan, you will never get my business. There are way too many apps that I love to fully support financially.
Especially for a business app. My product http://userping.com; is my first bootstrapped company, and while I'd love to be profitable enough to fully support all the great apps I've come to depend on, right now we're broke, so I have to choose between using your app or paying for another month of hosting. Pretty simple decision.
So, my vote is always for a free option. I think you should feel free to really lock it down and restrict the offerings because anyone who can't afford to pay for a service probably doesn't need 200 user accounts. They probably only need one or two, which should theoretically not cost you very much.
That's my $0.02. I very rarely even try services with a 30-day free trial. I'd hate to get hooked on something that is going to rape my tight budget.
First of all, I recommend reading Don't Just Roll the Dice if you haven't already: http://www.scribd.com/doc/25050778/Dont-Just-Roll-the-Dice-Pricing-Techniques
This was talked about earlier today (http://news.ycombinator.com/item?id=1613852). Unless your app requires a whole pile of non-paying users for network effects, free accounts don't seem to bring in much value. If you want customers who are going to pay at some point in the future, trials seem to make more sense than perpetually free versions.
You could of course try running without a free plan to start, and add one if no one's taking you up on the free trials. But for those people who use the free trial but walk away without signing up, I doubt a free version would have resulted in a future conversion from them. More users equals more support; free accounts could destroy your business.
If your app is good enough to charge for any features at all, then you should probably just go ahead with paid plans with free trials. You can make it really cheap for early customers (and keep it cheap for life for them) and slowly increase the price for new customers - call it the cheapium model.
The value of initial users is finding out what's actually useful to them (what they would pay for) and any major bugs/issues in your product. But you have to be careful you are not listening to the wrong users (who never intend to buy anything from you).
You are selling to businesses, so you probably need to focus more on direct and ad-based selling rather than going "viral" among the wrong userbase.