Questions

What's the best model for rapid customer acquisition? Freemium, free trial or pay only?

What is the most optimal way to model your business launch in 2015 for rapid customer acquisition? My startup has a 3 plan subscription model. It has privacy features with organizing and a bit of storage features. I'm concerned a free version might devalue the product value perception. Yet, in not offering a free version I turn away those without credit cards, lower user reach/market share. Also, it seems investors don't like it. Famous words of Mr. Cuban “You live by free. You die by free.” Is that still the case in 2015? My indirect competitors offer a free version with a paid upgrade. I offer some features they dont offer as I'm targeting a 'slighly' different audience.

3answers

* What is the customer RoI?
* How much do they save/earn per unit of use of your product/tool/service?
* How many users do you have right now?
* Are the free users likely to upgrade?
* Are they needed to provide a different value (community, content, network, ...) to the paid users?
* Are the free users providing an increased SEO or other lead gen surface area for you? A la widget with your link on their site which steers traffic and link-juice your way?
* Is your different audience better paying, more mature, in-a-tearing-hurry, or is it the lower end of the market?

There is no easy answer to your question. It will depend on many many factors. But the questions above should help you think through and choose an option.

I've used my own custom frameworks in the past to help many hard tech founders with similar questions.
If you want to go deeper, will be happy to do so over a call.

Refs:
https://davidjaxon.wordpress.com/2015/07/21/the-contrarian-view-with-freemium-its-easier-to-start-with-the-paid-product/
http://sixteenventures.com/freemium-or-free-trial


Answered 7 years ago

I think the best option would be always Free Trial. You need to let people see your tool and invest time on it. I'd say 14 to 30 days trials are a good idea. You can extend on a case-by-case, if the lead is engaging with you and wants to keep trying stuff.

Free trials with no credit card required are becoming the new norm.


Answered 7 years ago

At my last SaaS company, we offered a free trial for 30 days to enterprise customers with some limited functionality and a freemium app to consumers. We didn't have any problem attracting investors using all three options because our business model showed the value and strategic benefit of each. However, every situation is different so you need to think through all the issues.

The one answer I am confident is that the pay only option is no longer an option. Even the most powerful software and SaaS companies in the world offer free trials.

While you need to consider many aspects of your business model to make this decision, I can offer a high-level opinion based on my experience. First, if your service can show financial benefit from data collected or analysis completed as a result of freemium subscriptions, then you will want to keep those users active even if they are receiving the service for free. But if you can't see any financial benefit from the data generated from the freemium users, then focus on the free trial. Keep in mind, depending on your product, there may still be enough cost savings to show the value of a freemium model.

My second part to this advice is to consider how you will implement customer success for a freemium versus free trial. Both offerings will need a way to help the customer successfully use your product and find the value. If your service is too complicated for someone to use when they have no investment in it, then a freemium doesn't make sense.

If you would like to discuss your specific situation, let's setup a call.


Answered 7 years ago

Unlock Startups Unlimited

Access 20,000+ Startup Experts, 650+ masterclass videos, 1,000+ in-depth guides, and all the software tools you need to launch and grow quickly.

Already a member? Sign in

Copyright © 2022 Startups.com LLC. All rights reserved.