In the early days of the internet, many people created software and tools on the internet that were just simply free. In the early days (I am talking as early as 1994 to 200) these freebees lasted for the duration of a lifetime. You could sign up for many web services and have a free-for-life subscription.
Many of these services still exist. Put aside the ones whose strategy and revenue are from advertising like Google and Facebook, rather I am talking about tools like MailChimp, Gitlab that offer one basic version with most of the functionalities that allow you to get started and work for as long as you need until you are ready for an upgrade.
I have been in the Software business since 1985. Well I am slightly exaggerating. I was 14 then, but that’s when I bought my first computer and became interested in computers and yes I did start writing software, even though I did not sell a single copy of the ones I wrote between 1985 to 1994. Back then software was sold per unit copy. It had a slightly higher price tag and some professional software was actually unaffordable for most people.
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This high price tag, is actually what led to software piracy. It took Microsoft many years to understand that it needs to cater to the Home and Student market and that it does not lose money by selling the same software and full version of the software to students or homeowners. In fact, if they had made it free for students and homes, all those users would have been the future buyers of their product as they entered the business world.
The high price of software in the early days (1990s) gave rise to what was back then referred to as Shareware. Shareware was basically software that you could use for free, and share with friends and family and if you liked it, you were encouraged to pay something to the author of the program. The fee was always reasonable and nothing like what corporate used to charge for software packages in those days.
As the web services, connection and technology improved, shareware slowly died and gave birth to Software as a Service and the Freemium pricing strategy.
Freemium was great. I remember having access to a myriad of tools. Almost anything I wanted to do, I could do for free and it was great. Today I am a paying customer of the many tools like MailChimp, Canva, Sendgrid, Google drive and ….. that I started using for free and the good thing is that I can always downgrade back to the free version.
The Freemium pricing of these companies in my opinion is very effective. They keep a client until they are able to pay and they never lose a client when the client cannot pay for a period or for life. That client is their ambassador, that client is the one who will recommend them to his friends and colleagues and everyone because that’s the only tool he knows amongst the competitors that has allowed him/her to achieve their goals.
I know that Freemium does not work for all software models, however, it is a model that fits with many and in today’s world even more necessary.
A week does not go by where someone in some class or blog post does not suggest and rave about the software service they are using and working with and how it has helped them. Even I do it. It is natural to recommend what works for us and people are intrigued to see if they can make it work for them.
However, the internet is saturated with software tools, and startups hungry to convert clients to sales as fast as they can, and make $$$ in the process. And aren’t we all?
In my humble view, we have reached or are reaching a saturation point where SaaS can no longer carry on the way it does.
My SaaS bills (monthly or yearly) payments to Apps and services are at an all-time high. I am constantly having to ask for refunds for services I had stopped to use and have not used for years, and failing that I resort to calling my credit company to file a complaint.
Yet I find that all software companies on the internet have tightened and decreased their trial period. Trial periods that were for life or at least 1 to 3 months have gone down to 10 days. 10 days? I get introduced to 1 new service per week, 10 days is hardly enough time for me to customize the service, familiarize myself with it and establish my return on investment.
Take for example today. I was introduced to https://www.shieldapp.ai/ by Doug Lawson. I am on a marketing course with him, Yes, I am interested in converting more clients, however, I am at odds with the sales model adopted by Shieldapp. It is obviously working for them, but I don’t byte and I wonder how many others think like me. The starting price is cheap enough with limited functionalities. I am willing to give it a try, but then the trial period is 10 days, you have to put in your credit card details, and before you even start choosing a payment plan (monthly or yearly).
My decision after having read the benefits is I don’t want the headache of cancellation and calling my credit card company for a refund on yet another underused service. So Bye Bye ShieldApp.
Another Freemium platform I came across yesterday was Boardio. The idea is great they seem to have a going and thriving business. I sign up for free but there is little I get from the free version, not even one free client check or email to a prospective client. I read the various requests which I think are interesting but one thing bothers me. I fail to see a post date. I can’t establish when this request was posted. Was it yesterday, last week, or even last year? I have the option to upgrade and contact the client, but there is nothing to give me reassurance that this post is recent.
On the one hand, a 10-day trial allows you to concentrate on clients who are really willing to start with you and grow, and on the other hand, it allows so many other potential sales and future clients and ambassadors to slip away.
On the one hand, hiding some data might get you a few conversions and paying clients but on the other hand, will those clients stay for long and recommend you if things don’t work out for them?
Personally I think a 10 day trial and hiding info strategy is wrong. You have all these ambassadors working freely for you, recommending you, reducing your CAC. If only you took the time to appreciate the power of word of mouth advertising and your long term goals, If only you could see that clients loyalty is much higher when they have received something great for free and if only you could see that you can kill your competitors by pulling more users to you, even those who need a little longer to be convinced of how good you are or those who simply cannot afford it at the time they are searching for a service.
I leave you with the above to ponder on what should be your Freemium model and how you should consider your pricing and marketing strategy. I am not a marketing expert but here you have a simple account from one of your end users and only of course just one of them. 🙂
Struggling to decide which model might work best for you? Book a call with me. I am happy to have a chat and discuss your SaaS revenue model and sales strategy.