Your Free Plan is killing your SaaS app

If you listen to a sales guy or customer they will encourage you to add a free plan to your SaaS app.

The sales guy with a growth quota to meet: > “Of course we should have a free plan. Think of all the users we will get!”

The customer: > “I will certainly not use your app if I have to pay. So give it to me free forever. Think of the exposure you’ll get!”

You: > “Ok. Here, take my car keys too.”

Example: Evernote gets it wrong

Do you know Evernote? The app has always had a great product idea (Note taking with sync everywhere) and decent execution combined with terrible pricing.

I use Evernote every day and I still haven’t paid them. Why? Because there are a free plan that works for my use case. Evernote are big enough now to ditch their free plan entirely (make it read-only) and charge for what I think is a good product.

Your free customers are a nightmare

When I started my guestbook service back in ‘98 I was early with a SaaS app. I was dumb enough to have a free version of the service and a pro version that users had to pay for.

The ones who paid me were much friendlier in the support forums, asked reasonable questions and never complained about the few downtimes we had.

The ones on the free plan were much more aggressive, asked for more features and still never bought anything when the features were implemented. I guess I spent about 10x the time on free users vs paid users.

Don’t do this. Your time should be spent on the paying customers. If your offer is not good enough to attract paying customers you want to spend your time on improving your offer – not on giving support to people who are not paying a dime.

But what about marketing value?

Your free plan users will bring more users to your free plan. Is that really what you are after?

You should be generous - but focus your generosity on the people who are actually paying you. Giving their more value for their money should be a much higher priority than bringing on new free users.

Do you have any alternative pricing models?

Yes, I’m glad you asked. Start by removing your free plan. While you’re at it, think about removing your cheapest plan as well.

What I’m saying is that $19 - $59 – $99 is much better pricing options than $0 - $9 - $19 - $59 - $99. And if you don’t know what you should call your plans, check out my earlier post on alternative pricing plan names.

And if you are absolutely sure that you need to, give your users a free trial period of 7, 14 or 30 days to evaluate your service. Giving it away free for a short period is much better than free forever. But I would recommend charging from day one.

Your app has a value, right?