Why Users Don't Upgrade From Free to Paid Plans
It's not all and only about the customers' money!
The key reason why SaaS users don't upgrade is that they simply don't see the value in upgrading (or business hasn't demonstrated it to them well enough, yet).
There are several ways to go about it -- some certainly better than others: "Convincing Customers To Upgrade To The Next Tier Of Service"
Of course, the best approach to motivate existing users to upgrade is to offer capabilities and functionality that will give them greater value than the product they use today at their current subscription level. This assumes their experience with the current product is excellent (if this value is low, this should be fixed first).
How would entrepreneurs/companies know what provides value worth upgrading for? By asking existing users.
On the other hand, there are also the most common mistakes that businesses and entrepreneurs make by converting free trial users to paying customers, namely:
‣ Not having a pitching strategy for the paid plan
‣ Not highlighting the major advantages of features for the paid plan
‣ Not planning an email marketing strategy to convince the user to upgrade
‣ Not talking about the interest of the user
‣ Not making discounts
‣ Not providing different pricing tiers
‣ Not having "lifetime" subscription option with a one-time payment
‣ Not offering free trial without requiring credit card information
‣ Not reminding when the free trial is expiring
As a result, most businesses only convert a tiny % of their potential customers. The rest are still at some other stage in the buying cycle. Whether they'll make it to the purchasing stage someday, or maybe they won't -- that all depends on business owners.
Nice tips that make sense for many products.
Except the point about a lifetime plan for one lump sum payment. That is a complex decision that requires serious analysis and if you get it wrong you will be sorry. If you aren’t sure that a lifetime price will be a huge win then best to not go there IMO.
Thank you for your feedback!
Good list. Making the free tier too feature rich makes convincing to upgrade to paid an uphill battle. It needs to be in balance. Slack does a great job of being free for small teams and once you grow start paying because you need their features for larger teams (and assume you have more money).
Completely agree.
These are crucial for PM's ! It should be made clear IN DETAILS what is value if someone decided to monetize for your service. Thank you for this.
True, pricing a product is one of the most challenging tasks for product managers. Thank you for reading!
I think Loom does a stellar job of giving you ENOUGH to really start using the app (25 videos with most of the features), allowing you to be there as long as you like and come to love the tech. And just putting a ceiling on it.
I just upgraded after 1 year, but if they gave me a 14-day trial, I would never have been a customer.
I think this is a key point: what is the "value realization event(s)" the customer needs to experience to become willing to pay for the product. Reverse engineering one or more of these and then designing an onboarding and evaluation process that cuts the time and maximizes the likelihood are the next two challenges.
One thing we found really helped was to give people a really, really good reason to upgrade.
If your product does everything they need on the free plan then there's just absolutely no incentive for them to pay.
We've found restricting additional features to paid tiers helps in some ways, but what also really helped for us was that we limit how many team members and other items you can have.
If you take a look at our pricing page you'll get the gist of it: https://serverauth.com/pricing
This method worked well for us. People get to try the product out and once they have adopted it we find they move from the free to paid tier fairly quickly.
With regards to offering a one-time lifetime option this feels like a really terrible move unless you're selling something like a course or ebook. For Saas products lifetime access would be a huge red flag for a number of obvious financial reasons.
I think you've got every suggestion on point here, @ilonacodes.
For my product, ruttl, I have been taking into consideration all these points since the product will be launched very soon. I'll be sure to keep these tips in mind before the launch.
Thanks for sharing!
Cheers!
The best decision to consider! Glad you found this useful 🙂