Turning freemium users into paying customers: pricing and growth strategies for PLG

Held on:
December 4, 2024
Duration:
45 minutes
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So, you’ve set up a PLG billing model—or maybe you’re just starting to explore it. The big questions are: how can you turn freemium users into paying, loyal customers? Is your pricing strategy optimized, or could you be leaving money on the table? The right pricing approach can make a huge difference in your growth, helping you capture value from every customer tier.

Customer acquisition isn’t the only way to grow. Optimizing pricing can boost revenue by up to 20%, and hybrid pricing models improve retention and expansion, often outperforming traditional methods.

Join us for a chat with Natalie, Head of Growth and Operations at Navattic; Krzysztof, Co-founder and pricing expert at Valueships; and Sara Archer, VP of Sales at ChartMogul. We’ll cover practical pricing tips and strategies to help drive growth.

The panel covers:

  • How to turn freemium users into paying, loyal customers?
  • What’s the best way to price and package a PLG product?
  • What are some examples of pricing changes that can impact a company's growth?
  • Is it time to rethink pricing given today’s market?
  • Is the aim rapid growth or low-cost growth?

Transcript

Sara (ChartMogul): Hello, good morning, good afternoon, depending on where you're dialing in from, and thank you so much for joining. My name is Sara Archer, and I am the VP of Sales at a company called ChartMogul. I'm joined today by two esteemed panelists who are going to share some really interesting, practical, and useful information that you can take into any projects related to PLG conversion and pricing in 2025, or even sooner. We’ll give it just a moment before we kick things off. If you've joined one of my panels before, you know I won’t ask you where you're from, although I do care. Instead, maybe drop in the chat something you’re looking forward to. It can be small or big—what’s on the horizon for you, especially when it’s dark at 5:30 or 4:30, depending on where you are? Katherine's looking forward to not having the flu. How about you, Natalie? Anything exciting?

Natalie (Navattic): I was just putting it in the chat—I’m seeing Wicked today. It's part of the reason I wore green. I didn’t really plan it, but I was looking at my sweaters and thought, "Oh, green—perfect." I’m excited because I’ve heard such good things.

Sara (ChartMogul): Cool! I was a theater kid growing up, so it’s been on my list for a while. Kris, anything from your point of view?

Krzysztof (Valueships): No, but I need to get a turtleneck. Right after this call, because I feel excluded. You two are wearing turtlenecks, so I’m going to look for one right away. I’ll head to Zalando and order a bunch.

Sara (ChartMogul): If you want to join the Wicked crew, you’ll have to go with pink. Sorry, that’s the only color left.

Krzysztof (Valueships): And it’s a very pricing color! When you think about it, many companies in the pricing space—at least the ones I know—use pink. Also, in SaaS communities, a lot of people are using pink.

Sara (ChartMogul): Great! Thanks for playing my reindeer games. We’ve only got 45 minutes, so let’s jump into it. We’ll start with a quick round of introductions. But before we do that, the purpose of this conversation is to have a light-hearted Q&A panel about turning freemium users into paying customers. We’ll be talking about growth strategies for PLG and how to approach pricing. Pricing is a topic that performs really well from a ChartMogul content perspective, in part because it’s a very complex topic that sometimes feels unowned or intimidating. But it can be a really important, untapped growth lever. We’ve got two experienced folks to share their perspectives and learnings.

Sara (ChartMogul): Natalie, would you be so kind as to introduce yourself?

Natalie (Navattic): Hey, everyone! I’m Natalie Marcotullio. I’m the Head of Growth at Navattic. We're an interactive demo platform, but I’m really excited to talk about this because we just made the transition to a freemium model this year. We’ve been working internally on transitioning to offering a freemium model. A lot of that was about how we price it, how we upsell—I've also previously worked at a PLG company that had more of a free trial model, and we actually switched out of that a bit. So, a lot of experience introducing and then maybe removing freemium motions. I’m calling in from New York, from a WeWork. That's why it looks like I’m in a box, not underground somewhere.

Sara (ChartMogul): Excellent! Kris, how about you?

Krzysztof (Valueships): My name is Krzysztof Szyszkiewicz, but I go by Kris. I’m co-founder of Valueships. We are a pricing consultancy, and we typically support SaaS companies. Freemium is always a very important topic—should we go freemium? If yes, what KPIs to set? How should we differentiate? What value should the freemium offer have? So, I’m really looking forward to it. I’m not against freemium, as some people might think. As a pricing professional, I don’t have an issue with it. But I think we’ll dive into it shortly.

Sara (ChartMogul): Sounds good. Yeah, I mean, admittedly, as a sales leader at ChartMogul, I like to monetize absolutely everything. Today I encountered a vendor who has paywalled premium documentation, and we were considering pursuing this vendor seriously. My head of revenue operations said, "Yeah, but I’m scared we’re going to need this documentation behind a paywall." We have a freemium model here at ChartMogul where we have a free forever plan as well as a free trial. I've been here for six plus years, having done several pricing iterations myself, so I’ll try to share some insights as well.

Sara (ChartMogul): Let’s just start broadly. Kris, maybe I'll direct this question to you: Tell me about some of the most effective strategies you’ve seen for converting freemium users into high LTV customers from your time at Valueships.

Krzysztof (Valueships): There are a couple of things. Starting at a meta level, the moment you decide to introduce freemium to your model, your KPIs will shift. The core KPI… I did a bit of interviewing with my clients about how they’ve approached freemium strategies. The ones that were most successful started with the conversion from free to paid. That's the number one priority. I think at a meta level, that’s the most important thing to track: Is it successful? If you dive deeper, scaling the freemium strategy depends on what stage you’re at. If you’re a very small company—say, in the seed or Series A stage—this is the moment when you can afford testing your freemium model. If you're unsure, and you don’t have the luxury of running primary research or spending months figuring out how to structure the freemium model, it’s not necessary. But testing it live is key. There is no silver bullet for freemium models, no one-size-fits-all answer for pricing and value metrics. It’s something that needs testing. The companies that were most successful started testing their freemium models. They were experimenting with the value the freemium model offered and comparing it with the value in the first paid plan. For example, with one of our clients, they were offering an enterprise-level SaaS solution for social media, and we found that enterprise clients were moving into the freemium model because their core value metric was aligned. So, we added a supporting core value metric to the freemium model, which worked really well for enterprise clients who need more users for their teams. Testing is really important, as there are no one-size-fits-all solutions for freemium models. You need to test the value you’re offering and the features of the freemium plan vs. the first paid plan.

Sara (ChartMogul): Lots of good insights there. And one thing I didn’t mention at the top of this webinar is that, yes, it’s being recorded and will be syndicated. Our plan is to deliver a cheat sheet as a leave-behind. So if you’re taking notes or listening while multitasking, don’t worry—we’ll send you a Notion document with podcasts, resources, and big takeaways. Very interesting! Natalie, you haven’t always had a PLG approach, so as you listen to Kris talk about core value drivers, I’m curious: From your point of view, what did it look like when you transitioned your go-to-market motion? How did you think about approaching identifying value drivers or making sure that you got the right leads in the funnel because, you know, maybe you want to sell big ticket value items to enterprise businesses, and there can be some apprehension about introducing PLG and maybe seeing smaller ACVs. So, curious to hear a little bit about your journey.

Natalie (Navattic): Yeah, I love Kris's point—just like you can't figure it out unless you test it, and that was sort of our entire journey. So, as far as how we figured out what our value metric was, we kind of heard a lot of research from potential prospects before we launched our freemium model. A lot of people just telling us, "Hey, I’d really love to try interactive demos. Me as a marketer, I believe in it, but I really just have no budget this year, and I can't really ask for a demo until I try it out." So, this common theme we kept hearing was, "I need to try a demo before I could buy it." It sort of became easy for us to at least first figure out like, "Oh, one demo." We’ve evolved from there, and I can talk a little bit about the changes we made. But really, just doing that early customer research, talking to potential prospects who would use this freemium model and them saying over and over again, "I need to validate using a demo," made it pretty clear: "Okay, if we give them one demo, that is good enough to get them testing." Then, as far as figuring out, "Okay, well, how many demos will get them to convert to a higher plan or upgrade," we started with a $50-a-month plan because our product was not fully ready for full self-serve. So, we wanted to have a little bit of friction. We figured, "Right, if someone paid $50 a month, they’re more likely to actually sign up, activate, see value." We wanted to keep it a smaller pool. Our product wasn’t ready for just a flood of freemium users, so we figured $50 a month. Let’s test that first. We didn’t really do any advertising for it. We just put it up on the website and saw first: could people self-activate? Then, by watching PostHog recordings, basically how they were going through the product, and by doing customer interviews, we got to learn a little more about what were those friction points, what wasn’t working, and then also validated, yes, people were interested in upgrading for more demos. That was the main conversion point. So, I really think, right as Kris said, like try in a way to maybe do it with a small percentage of your traffic that you can, test it, and just see. Ask the sales team if they’re talking to these leads, "What is the one thing they’re asked about? What is that conversion point?"

Sara (ChartMogul): Interesting. So, when you introduced the "here, try one demo," I get it. You want to have your hands on it. Did you put sales or customer success—did you put a human on those to help control that experience, or did you let them go on their own?

Natalie (Navattic): We did have sales assigned to these leads, so they would be in charge of outreach. And I will say, sales kudos to our sales team—they really changed to a more consultative, almost like support-like approach. We saw that was the only way to get people to respond to us. When we tried to reach out with very typical sales emails, no responses. If we did very tailored, like, "Hey, I saw you were checking out this product, are you interested?" or "I saw you started building a demo here. Here are some suggestions or tips on best practices or examples to make it better," that worked a lot better. But so far, we have seen the majority of our conversions still come from a sales-assisted upsell. It’s not full PLG self-serve yet.

Sara (ChartMogul): Yeah, that’s interesting. I mean, in my role at ChartMogul, I meet with a lot of PLG businesses, some of which have thousands of inbound trials or free users created every month. And I think there’s maybe a little bit of a misnomer with PLG, where it’s like, "Well, the product experience will deliver the value driver." PLG being Product-Led Growth, where your product is really the first thing that’s delivering the value that you’re promising. And, you know, I said, "Why don’t you just put ChartMogul right?" We get some number of inbound trials every month. It’s an increasing several thousand, and we have a team that sits on top of those leads, and we actually call them. So, on the vein of converting freemium users, it’s not something you would think about in 2024. And we don’t force phone numbers, we don’t force calls, but it is something that happens when we get a really great sales-qualified lead that comes through and alerts our sales team. We say, "Hey, did you need any help getting set up?" And I was surprised how receptive our buyers were, because they’re pretty saturated. They don’t want to talk to salespeople, but when we use that sort of methodology around, "Hey, there are some things that are a little bit hard to get your head around or undiscoverable. Can I point you in the right direction?" some people will say no, and we say, "No problem. If you’re fine to go on your own, then have at it." But, yeah, it’s interesting to think about how your user feedback sort of affects your approach to converting folks, but also pricing.

Sara (ChartMogul): Great! Well, look, I mean, it sounds like when you landed on introducing more PLG and letting folks experience that interactive demo, your user feedback played a really big role. They said, "We want to use the product, let us use the product." You said, "Sure, fine." And when we think about pricing, a lot of times it’s the customer’s job to ask for a price concession, right? They say, "We want it to be cheaper. We want to pay less. It’s too expensive." So, maybe a question to you, Kris: What role does user feedback play in shaping pricing models, and how much should you listen to those loud voices of your customers, who may have merit but may also be fishing for a Black Friday discount?

Krzysztof (Valueships): Vital. It’s a vital role. Actually, when you think about this… so, there—again, there are two things here. So, like, you know, I’m a consultant, and I only think in terms of two dimensions. But there are two things here. So first is your strategy and the job that you are doing. Right? If you are doing a better job than your competitors, and if you know that you have more features, you know that for the users that you’re doing a better job, you can be either more expensive or cheaper. If you’re more expensive and you are doing a better job, you’re serving an underserved market. If you’re doing a better job and you want to price yourself less than the competitors, you want to win the whole market, basically. It comes down to the very, you know, strategic questions that you want to have in terms of the job that you are doing and the quality of your product. And this is where you can get the user feedback from, because you want to know if you’re doing a better or worse job than your competitors. And actually, it’s not only your user feedback, but it can be also your prospective user feedback. So, one thing is to learn from your current users, but remember they are very biased, especially in terms of prices. They are very used to your prices. So, whenever we are doing studies or primary research with users and prospective users, we see that asking people who are used to the solution gives us insights, but some of the insights are not really working very well in terms of conversion because they’re deep in the tool, they know the quality of the features. So, that’s number one: user feedback is vital at the strategic level. It is important to understand if you’re doing a better or worse job. Then, when you think about pricing, especially at the PLG level, I think the core of pricing is not about the price tag, but the differentiation that you are having. No matter in what business you are, your customers will have different price sensitivities. You will have budget customers who are looking for the cheapest deals, great, you need to serve them. You’ll have average customers, so the ones that we typically understand the most, and you will have freemium customers, the ones that don’t really care about the price—they only care about the quality. You can find this everywhere. These are the best.

Krzysztof (Valueships): The mistake that we frequently make is focusing only on typical customers. As a result, we're lacking conversions for budget customers because we don't have an offer that serves them both in terms of value and pricing. We're leaving margin on the table by not having high prices for low-price sensitivity customers. These customers typically are those who are either founding their own company or working within a company. The problem is that while you understand your normal users well, you don't have an offering for both freemium and budget users. This is where user feedback becomes vital. Once you understand the broad, generic truths, you need to know how to differentiate. You should differentiate your products by preference and willingness to pay. Things that are more expensive typically have features with a very high preference and willingness to pay, which we call frequent differentiators. But how do you know which features are your differentiators? If you don't ask your users, you can’t really know. Judging your solution is a great first step, but if it’s the only step you take, you might be misled. So, thinking about user feedback, talking to users — I know it’s a common suggestion, right? Every webinar tells you to talk to users. But here’s one piece of advice: talk in terms of preference (what they'd like to have) and willingness to pay (what they’re willing to pay for, where they really see the value). Of course, every new feature will be welcomed by users if it’s free, but the real question is: will they still welcome it if there’s a cost behind it? This is particularly important in PLG (Product-Led Growth), where you don’t always get user feedback from sales because you can't leverage your key account managers, as they don't speak with prospective buyers at all. This is where user feedback plays a vital role. Understanding which features differentiate you is key, and you should have the biggest differentiators in your paid plans. You can offer limited access to these features in freemium plans, but to successfully transition customers from free to paid, differentiating features play a crucial role.

Sara (ChartMogul): I really like the idea of segmenting your customer base based on willingness to pay. It’s a nuanced exercise, especially depending on how large your customer base is. We have geographic differences in price sensitivity, but that’s not the only factor to consider. At ChartMogul, we sell to both B2B and B2C SaaS businesses, which have different margins, maturities, and funding landscapes. So, understanding price sensitivity, combining it with value drivers, and tying those value drivers to feature gates or packages requires a deep understanding of many dynamics. I'm curious—who owns pricing in your organization?

Natalie (Navattic): At Navattic, pricing is owned by a committee, which has its pros and cons. Our growth team, which includes myself and our growth marketing manager Ramin, who has been helping with our PLG motion, plays a role. Our sales team, particularly our head of sales, also contributes. This is why I'm a big fan of the product-led sales approach — you get a lot of input directly from prospects. I really take what sales says to heart because they’re closest to the people who are willing to pay. Of course, the product team and CEO are involved as well. Everyone usually discusses it in our team leads meetings, and we try to reach a consensus on what makes sense for pricing. But sales tends to provide the most input, as they’re hearing directly from customers.

Sara (ChartMogul): That’s interesting. A good tell can be when people ask if something is included in the free plan. They’re almost surprised.

Natalie (Navattic): Yes, exactly! We’ve been hearing that a lot when people ask, "Is this included in the free plan?" That’s always a good indicator. Another tell is when people really ask a lot of questions about one particular feature or seem really interested in it. These are ways we gather data to identify premium or differentiated features. We also measure which upsell buttons in our product are being clicked most frequently, which gives us a good indication of what parts of the product are most interesting to our users.

Krzysztof (Valueships): Right, also, to your point, Natalie, it's not just about talking to the customers. It's also about verifying their behavior. Understanding not only their opinion on willingness to pay but also looking at usage data. There are different frameworks for this. For example, if a feature is used by more than 30% of your clients, it should likely only be in the paid plans. If more than 70% are using it, then it should be distributed evenly across all plans. It’s about interviewing clients and prospective clients, but also looking at the usage data to confirm or filter out any biases they may have.

Sara (ChartMogul): My husband says, "Trust but verify," and I think that applies here as well. That's a great point! One thing that's interesting about what you both have said is that feedback is crucial. You need to listen and apply this research and these methodologies. But at the same time, you also have to measure and consider how adjusting to that feedback will impact your overall business and growth goals. I have a story here, but maybe, Natalie, I’m wondering: As you thought about introducing PLG and seeing smaller conversions on the $50 plan, did you feel any apprehension about the changes you were making? How did that impact the way you thought about your larger growth goals as a business, if you’re able to share?

Natalie (Navattic): We definitely had to do some modeling beforehand to say, “Okay, what percentage of our customers do we think will go with this free plan, besides the paid plan, and how much revenue can we expect?” From the beginning, we saw this much more as a lead generation awareness tactic than expecting it to have a huge percentage of our revenue. We still expected most of that to come from our sales lead motion. We also tried to model as best as we could that we would see a reduction in leads and pipeline when we first launched our freemium plan. And we did see a little bit of a reduction once we publicly promoted it, but after doing a big launch, we saw that start to even out. Now, about three-quarters into having this freemium motion, we’re starting to see it where we’re getting a good conversion rate. It took us time to figure out what to gate and how to sell to these people. We’re seeing a slight increase in the pipeline, but all that being said, so many PLG leaders I’ve talked to have said, “You should anticipate a little bit of reduced growth or pipeline at first, because people are going to opt towards the new free motion. And you’re not going to know how to convert them yet—it will take time to learn and balance it out.” But once you learn how to convert them, you get more revenue from it.

Sara (ChartMogul): Interesting. Yeah, I think that modeling exercise is really tricky. What’s the saying? “All models are wrong, but some are useful.” I think for us, it was getting the team around the idea of, “Okay, change is scary.” That’s where I think the change management skills I’ve been stressing over the past 18 months have been crucial. If you’re going to see a reduction in pipeline or smaller growth rates, what does that mean for morale? I think backing that up with customer research and a thoughtful approach can really help teams navigate changes. Over time, you start developing that “pricing muscle,” and if you’re a revenue leader, you can sharpen that skill in your toolbox.

Krzysztof (Valueships): I think pricing should be revisited at least quarterly. One key element is discounting—so you need to assess how much revenue is leaking due to suboptimal discounting policies. Companies often deal with things like offering a Black Friday deal that’s not turned off later or over-discounting for various reasons. If you see more than 10% of your revenue leaking into discounts, this is a red flag, and it’s time to act on it. Additionally, research shows that companies that change their pricing more often tend to perform better in terms of average revenue per user (ARPU). However, it’s crucial to avoid pricing too aggressively without maintaining perceived value. You should also adjust pricing by inflation every year—this is a standard practice. However, keep in mind that raising prices too often can alienate budget-conscious customers. So, quarterly, look at your discounting; and yearly, review price adjustments due to inflation.

Sara (ChartMogul): I agree. At my company, we’ve changed pricing maybe four times over the past six years. Some changes were small, others were larger. Changing our value driver a few years ago was instrumental. For example, we used to price our product based on the number of customers, but we switched to pricing based on the monthly recurring revenue running through our subscription analytics platform. This solved a lot of problems for us. One thing that indicated our previous pricing model wasn’t working was the high amount of discounting. We had customers with price sensitivity who would compare our pricing model with a mobile app business, for instance. When we changed to pricing based on revenue, it made sense for different customer types and eliminated the need to discount as much as 40-60% in some cases.

Krzysztof (Valueships): Looking at your discounting policies is a great tip. When we did our project, we migrated customers to a new pricing model, which was a tough exercise but ultimately healthy for the business. Changing your go-to-market strategy and pricing requires the foundational elements to be clean in the backend of the business. If you want to change feature gates, pricing, or packaging, it’s important to have a clean system that can support these changes.

Natalie (Navattic): I completely agree with that. To add, if you're just starting to think about these changes, one recommendation I have is to keep things clean, consistent, and easy to administer. Having a well-organized backend makes these types of experiments much easier. If you’re planning changes like pricing shifts or adding new features, it’s essential to think about how you’re provisioning access to new features, packaging plans, and managing subscriptions, as it’ll make implementing changes much easier in the long run.

Sara (ChartMogul): Great point, Natalie. Speaking of practical considerations, I know this is a question that often comes up around freemium models: what do you give your support team? Is there any difference in the level of support you offer to free versus paid customers?

Natalie (Navattic): We do provide some support for free customers, but we’ve kept it fairly minimal—just chat support. We don’t provide a customer success manager (CSM) for free customers; that’s reserved for paid plans. The most successful PLG companies I’ve seen have their sales teams pick up some of the first-line support. This helps build relationships with potential customers and eventually transitions them into sales conversations. If a free customer is asking a question, it’s a great opportunity to provide some guidance, build trust, and move towards a potential paid conversion.

Sara (ChartMogul): That’s a great approach. At my company, we have an 11-person customer success team and we’ve made the decision to be a bit more liberal with how we provide support to free customers. We have a difficult product domain, and offering good support is part of our ethos. While our free customers officially only have email support, we do make time for them if we think it’ll make a difference in their experience or conversion to a paid plan. We share the support load between our sales and customer success teams.

Krzysztof (Valueships): Support is always a critical aspect to consider. It’s important to remember that offering free support isn’t necessarily a loss—it’s a way to create an experience that builds trust. However, if you want to optimize your freemium model, it’s crucial to balance the level of support with your overall strategy and resources.

Sara (ChartMogul): Great insights, everyone! We’re nearing the end of our time, but I’d love to tackle one more question. Michael asked, “Does it make sense to offer a free plan? Should you have a free forever plan, or how should you approach that?” Krzysztof, what do you think?

Krzysztof (Valueships): It really depends on your business and your goals. But from what we’ve seen across over 7,000 companies, having a freemium plan can often lead to lower prices overall. If you give too much away for free, your perceived value can decrease. A freemium model can work well for PLG companies, but you need to think about how quickly customers can derive value. If they can see value quickly, a free trial might be better than a free plan because it doesn’t deteriorate value perception as much. It’s also important to ensure your team is ready to support the freemium model—not only technologically but also with the right capacity to handle conversion from free to paid users. If you're not ready to invest in the resources to support a freemium model properly, it's best to wait until you're in a stronger position to execute it effectively.

Krzysztof (Valueships): Well, freemium is definitely not for everyone. That’s number one. It has consequences in terms of pricing, and you really need to be prepared to launch a freemium strategy. It may seem simple to say “free” like we’re discussing a free model, but answering these free questions will take a lot of time—like one or two hours. It’s not as simple as it might seem. Asking yourself these questions can really help when making the decision. There’s no clear-cut yes or no answer, but these questions can support anyone in taking the decision.

Natalie (Navattic): Just to add on that—oh, sorry, go ahead, Krzysztof.

Krzysztof (Valueships): No, go ahead, Natalie.

Natalie (Navattic): I was going to say I have one more question to add, because I was going to say the exact same things Krzysztof did regarding quick time to value and whether you have someone who can support and run the freemium model. I’d also ask if you have a natural growth loop. Will more people using your product bring in more people? For us, we have a very visible product—people put demos of it on their websites, and the more demos that are out in the world, the more leads we get. We’ve already seen that as a major lead channel. So, if you’re seeing word of mouth or people seeing your product already being a lead channel, I think that’s a really good indicator that freemium could work.

Krzysztof (Valueships): Yeah, I’d echo that. Realistically, there are only two ways to grow your business—get more customers or charge your existing customers more. One benefit of opening the floodgates, especially if you have some virality to what you offer, is that you’ll have a larger audience with the potential to convert them. But you need that potential to convert them, and that’s the tricky part. The beauty of something like a free trial is that it has some urgency—it has an expiration date. The purpose of the trial is to evaluate your use case against the product offering. That’s maybe a benefit of having both freemium and free trial models, like we do at ChartMogul. But it’s a lot to administer, and it requires quite a lot of people to manage it.

Krzysztof (Valueships): And philosophically, it comes down to how you monetize the traffic on your website. What’s the most efficient way to monetize that traffic? For example, in eCommerce, you might use a metric like Return on Ad Spend (ROAS), though that might be different here. But it all comes back to this point: If you can generate more revenue from the traffic that comes to your website with a freemium model, then it’s a good indicator that you should move forward with it. Of course, it’s a bit of a guessing game at the start, but with enough traffic, you can test it and find out relatively quickly—probably within a few months.

Sara (ChartMogul): We may have time for one more question from Oliver, as this is the counterargument. He’s asking: “What about not offering freemium, but having a starter plan to get folks in the door at a small entry price?”

Krzysztof (Valueships): The only thing I’d say about that is that recurring revenue is about delivering recurring value. Occasionally, I see folks enter a starter plan and, like Natalie mentioned earlier, you have customers who just want to try the free demo. If you convert those people to paying subscribers who only wanted to try the product, you can be hit with hard churn because that starter price was low enough for them to justify giving it up. So, that’s the only caution I’d have about a starter plan, Oliver. I’m sure there’s more to your strategy, but that’s one potential pitfall.

Sara (ChartMogul): Right, so the small entry price—it’s a bit of a balancing act. If you’re in a pricing strategy like “landing” or “fencing,” then having a starter plan might make sense. If you’re using landing, your customer can keep upgrading, getting bigger and bigger. In that case, a starter plan might work, especially if you’re working to break even on costs. However, if you’re in the fencing situation, where your entry price is very low, say $49, and then the next plan is $1,000, then freemium may work better than a cheap plan. In that case, you might get distracted by smaller clients that aren’t your ideal customer profile (ICP).

Krzysztof (Valueships): Exactly. So, it depends. If you’re in the landing situation, a starter plan makes sense, but if you’re fencing, it’s more likely that freemium is the right strategy.

Sara (ChartMogul): Great insights, Krzysztof. We’re almost out of time, but I think this is a really complex issue. We could go on for another 30 minutes with these kinds of questions. But we’ll wrap it up for today and follow up via email with additional resources.

Krzysztof (Valueships): Thank you, Sara, and Natalie, and thank you to everyone who joined today. We hope you find the resources useful over the holidays.

Natalie (Navattic): Thanks for having me. It’s been great discussing this with you all.

Sara (ChartMogul): Thanks, everyone. Have a great rest of your day!