Best month ever, introduced free tier, then worst month ever!
Pricing is difficult!
In June, we had our best month ever, with $1,287 MRR added.
July 2nd, we launched a free tier, offering a fully-featured service for users with less than 2,500 visitors.
In July end, we ended the month with $20 MRR added. Yikes.
So the post-mortem on this experiment is that by offering a fully-featured, free service, it made it harder for >2,500 visitor users to convert knowing that it was just their user counts that prevented them from receiving the free tier.
We did have 587 signs-ups though, instead of the usual 250 average. So the free tier worked great as a marketing strategy, it just killed sales and our CVR.
So, have pulled the free tier again in favor of growth and sales and we'll see what August brings. I don't really regret the decision, pricing experiments aren't always successful and I was prepared for that.
The bummer is, I really wanted to support smaller businesses with better analytics, I just won't want to harm my own business in the process.
Will return to evaluate an alternative free tier in the future, but for now, lesson learned.
ps. if any IH wants a go at the free tier, please hit me up, I just won't be advertising it on the homepage.
This is interesting. So now do you have all paid plans only?
I have huge generous free tier for Prospectss All the other competitors would ideally charge around $29-$99 for the number of credits I am giving away in the free tier.
I plan to add more features into it (Search Email by Domain, Search Phone Number by Domain, Technology Lookup Database, etc) and remove the free tier, instead, offer $49 for unlimited access/credits.
What do you think should I go this way?
I think with usage-based pricing, a free tier is a good way to go. As you want to get people hooked on your service, and reliant on it enough that they scale past the freemium threshold into a paid plan.
How you set that threshold should be based on your analytics data of how users are using the service.
For our pricing, we package everything up and make it scale to MAU. Which is tough as a startup paying $19pm gets the same service as an enterprise who will pay $10kARR. That's a hard sell when you start giving away the service for free to indies & very small business, so I think that's why free didn't work out for us.
If you wanted to experiment, you may find people have a higher CVR% when you reduce the freemium threshold considerably. Especially if you are then delivering better features (read: more value) than your competitors.
You are making me consider dropping my free tier! I never didn’t have one, but struggling to convert many to paid atm
The way you convert them to paid goes through analysis of those who convert. Try to understand what the users who convert do differently than others, and then drive more people to that action. I 100% guarantee you will see the difference. I am developing Tractific to automatically do this analysis since it’s a very long and tedious process.
I think it's worth experimenting.
A few tips to doing so:
Good luck!
Kudos for giving it a try and also being decisive in rolling back 👍🏻
Still very inspiring results! 4k MRR...