Should you offer a free tier to drive adoption, or charge from the start to validate willingness to pay?
Experts
Free drives adoption and creates network effects. Monetize later once you have scale.
If people won't pay, you don't have product-market fit. Charge early to validate demand.
Finding hidden growth opportunities in your product | Albert Cheng (Duolingo, Grammarly, Chess.com)
The lived product experience for most of the free users was that Grammarly was just a product to fix your spelling and grammar because those were the free suggestions. What if we actually sampled a number of different paid suggestions and interspersed them to free users across their writing? All of a sudden, people were seeing Grammarly as a much m...
Fantastic. Glad to hear that. Grammarly is a freemium business model, which means that over 90% of our users are on the free service and the rest of it pay for subscriptions essentially, right? And so one of the teams, they work on subscriber conversion, PM there is Kayla, that team is great and their job is to figure out the free to paid subscript...
Mastering onboarding | Lauryn Isford (Head of Growth at Airtable)
I guess I have so many of them. You're educating me on my own perspectives today. Freemium and free trials. So, to get on the same page with definitions for all of our wonderful listeners, a free trial is when you can use the product for free for a limited time and then your only option beyond that limited time is to pay for use of the product.
How to price your product | Naomi Ionita (Menlo Ventures)
If it gets you to the aha moment, that path to habit formation, that has to be free. That's the core utility of your product. And so the idea is that in that first session or first day, someone's getting to see the delight and saying, "Oh, my God. I'm never going back to the old way. This is how X gets done.
And I think if you do have a few free users, crafting it as more of a sweetheart discount, like more of a year one discount, but getting paid over time. I mean, again, I am a big believer in having some early users being your design partners and really giving you that tight feedback loop to make sure you're building the right product.
Inside Canva: Coaches not managers, giving away your Legos, and embracing AI | Cameron Adams
In our conversation, we cover a ton of ground including how Canva stays product obsessed, their freemium strategy, lessons about building MVPs, how Cam and the product team think about AI within their product, also peek into their unique team culture, their SEO and growth strategy, and also peek into some of the stuff they just launched.
Cameron Adams Freemium for us wasn't so much a growth strategy or a monetization strategy as much as it spoke to our core mission of empowering the world to design. We truly want to democratize design, which means we want to get design into the hands of as many people as we can because we think that the world is a better place when more people can ...
The ultimate guide to product-led sales | Elena Verna
In any of those cases, most of the time free to pay conversion is the biggest focus of any given team just because we want to better convert and inflow into our user base, assuming we have good product-market fit so we have a solid retention happening.
If I'm in the free plan or in the lower tier plan, I don't even see it. I don't even know of it existence because it doesn't exist in the app because it was never designed for me to even see it. Just doing one small change of pushing your design reviews to review functionality from every single state of the customer, free state, lower paid state, a...
The 10 traits of great PMs, AI, and Slack’s approach to product | Noah Weiss (Slack, Google)
That is not part of your job. Your job has goals and measurements and everything else. Really ... understanding that. How do you push on that in that new user experience? It sounds maybe a little ludicrous, but Slack always has a free product.
Either we're on the free tier or we get to pay for the paid tier. And that wound up being one of, I think the Ripest veins is figuring out how to give people a taste of the full premium Slack experience so that they would never want to go back and doing that in a variety of different points in the customer journey.
“Dumbest idea I’ve heard” to $100M ARR: Inside the rise of Gamma | Grant Lee (co-founder)
So we kind of stumbled into having to do pricing and packaging. I mentioned our big AI launch in March 2023. This was pre-revenue, so we wanted just to get, we focused all of our effort on the first 30 seconds, literally all hands on deck, just trying to get that right. And we spent zero time on actually monetization. So we had a credit system.
...what is the overall willingness to pay. And so we did use that. We did kind of integrate some forms of conjoint analysis, which is just trying to understand what are the features or things that people actually value in your product.
Pricing your AI product: Lessons from 400+ companies and 50 unicorns | Madhavan Ramanujam
If you're a moneymaker, you fall into one of two traps. The first one is you might nickel and dime your customers to death. Because you're focused on monetization, you might come up with a very differentiated pricing model, different levels, hidden fees, things to charge for many different things and come across as just trying to nickel and dime yo...
So the two questions that we commonly hear from AI founders is, "How do I set the right pricing model?" as in, "How do I charge?" which becomes way more important than how much you charge. Because the underlining business model has changed. We have moved from software being a pay for access to now you're paying for work delivered.
10 lessons on bootstrapping a $200m business | Patrick Campbell (ProfitWell)
The number one thing to figure out when you're thinking about the different pricing pieces, pound for pound, it's the pricing metric or the value metric. That's how you charge per user, per thousand visits, per thousand what's its, whatever it is. Consumer companies, it's a little bit harder.
It's super boring, but the biggest hot take is you just have to do something once a quarter. That's it. I've been trying to teach about pricing for a decade now. I've done a lot of different approaches on this, and I think the easiest thing is, listen, you have three growth levers. You have acquiring customers, monetizing them, and retaining them.
A framework for finding product-market fit | Todd Jackson (First Round Capital)
WorkOS also recently launched AuthKit, a complete authentication and user management service. It's essentially a modern alternative to Auth0, but with better pricing and more flexible APIs. AuthKit's design is stunning out of the box, and you can also fully customize it to fit your app's brand.
Eppo does all that and more with advanced statistical methods that can help you shave weeks off experiment time, and accessible UI for diving deeper into performance, and out-of-the-box reporting that helps you avoid annoying, prolonged analytic cycles.
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We charged from day one and it was the best filter. Free users give you noise. Paying users give you signal.