Freemium vs Free Trial – Why we Ditched our Free Plan

Freemium vs Free Trial

A few days ago we silently changed Process Street’s pricing model for all new users from freemium to a 30-day free trial. At the same time, we increased the price on all of our plans except the entry 10 user plan (now Premium 10). Today, we announced to our users that we’re no longer offering the free plan and that everyone who is currently using the free plan will be switched to a 30 day trial of our Premium 10 plan.

During the trial, users have complete, unhindered access to test Process Street. They can create as many templates, team’s and jobs as they want, plus upgrade to any of the plans free of charge. At the end of the 30 days, they must decide if they want to continue using the product as a paid user or not.

All of our paying customers on plans larger than 10 users, will remain on their current plan with no changes unless they choose to upgrade/downgrade, in which case they’ll be moved to the new pricing model.

In this post, I’ll explain why we chose to change from freemium to free trial.

Why Freemium in the First Place?

There were a couple of reason we decided to launch Process Street on a freemium model. First, the initial product simply wasn’t ready for paying users.  When Process Street first launched it was extremely basic. As such, we didn’t believe we could attract enough paying users for the product when it was missing so many critical features (in fact, we didn’t even have billing in place so we couldn’t have charged them if we wanted to!) However, we knew we needed to have enough users so we could talk to them and gather feedback to improve the product. We felt that a freemium model would be a good way to accomplish that.

We were also users of a few freemium products that we enjoyed and received a great deal of value from such as Evernote, Dropbox and Asana. The success of these products blinded us a little as we followed suit.

Freemium can be a great business model especially if your product has consumer appeal. The biggest benefit of going freemium is that it lowers the cost of customer acquisition, and that, combined with our need for users, were reasons enough to convince us to take the plunge. We have since learned there is a lot of evidence against freemium, and a quick search for “freemium vs free trial” on Google sheds can be illuminating.

The Freemium Results

Our conversion rate to date from freemium to paid has been 0.72%, less than 1%! That number is not great by any means, with most freemium products sitting between the 1-5% range (2-3% is a GREAT result for a freemium product).

I feel our stats are skewed, however… Since we first launched our MVP on November 14, we’ve developed the product significantly. The initial product was bare bones when we launched, not even having a way to reset your password. The 0.72% figure is an average of all our signups starting from launch, and thus not very accurate. Since then, we have listened to hundreds of ideas and problems from customers and worked hard to build them into the product. As a result, have seen our conversation rate boosted.

For example, in the last 30 days, our conversion rate from freemium to paid has been 1.8%, a much better number but still not as high as we would like. Solid SaaS companies like Groove are seeing 10% conversion rates on their free trials… the kinds of numbers we’re going after!

Why Drop the Free Plan?

We are changing our business model for three reasons. Firstly, the free plan was limiting the extent to which our users could test the product. Process Street is built for teams, as one doesn’t really document processes for themselves. Usually, it’s something done for training or scaling an organization.

The same goes for number of processes. Generally, teams have more than 5 processes (the limit on our free plan). As a result, we were receiving feedback from our users that they had bigger teams and needed more documents to be able to test the product properly.

The second reason is that our product has significantly evolved since our initial release. Since we’re offering much more value now than when we first launched, we feel comfortable charging people, even for lower volume users.

Finally, this change is a test to see if it increases our revenues. I’m not going to lie, we run a business. We’ve spent more than a year and a lot of money building it, and we’re not trying to give it away for free. Not that we’re against giving away stuff for free, but at this point in time we’re most interested in increasing revenues and we believe this is one of the highest potential return tests we can run.

Why 30 days and not 14?

We decided to go with a 30-day trial based on data we’ve collected from our app since launch. We’ve noticed that it takes many of our users some time to get deep into our app and activate properly. The reason for this is our app requires a significant time investment before it can be used effectively.

Our product is a documentation tool to help busy managers run their teams efficiently. This can be a bit of a catch-22 as it’s not easy for busy managers to find the time to create detailed process documents while they’re busy putting out fires in their day job. They know it’s important, but it tends to be put further down the list than major catastrophes and revenue generating activities.

This has lead to us having some slow conversions on our freemium product (people converting 6 months later because they just didn’t have the time to get around to their documentation). Because of this, we thought we should give our user more time to get familiar with the product.

Maybe this assumption is wrong, and maybe a 14-day trial would encourage people to pull out their credit card even if they haven’t tested the product fully. This is something we’re considering testing in the future, but for now, 30 days is what we’re going with.

Why the Price Increase?

We increased the price on the larger plans for reasons 2 and 3 above, plus a couple of others.

First, our customers told us our pricing was low. Some people don’t get our product, they look at it and say “how is that different to Asana”. However, people who manage large teams and have an issue keeping everyone on the same page really understand just how big of a problem it can be, and how valuable a solution is.

For example, increasing the productivity of a 40 person team by 10% is worth a hell of a lot more than $100 a month (what we were charging with our previous pricing). Even if they’re unskilled workers making $1,500 a month (which none of our customers are) its still a $6,000 a month increase in productivity. Bring the salaries up to $100k and that number skyrockets. A few of our customers said they would happily pay more to see those kinds of returns on their team’s productivity and it totally makes sense.

Secondly, larger teams use more resources, require lengthy onboarding and more intensive support. To be able to service our these customers better, we need to charge a little more.

We know this is a pretty big change for our free users, and we are sorry if it causes you or your business any issues. If this is the case, we would love to hear from you, either through our in-app support system or here in the comments.

If you have been using Process Street as a free user up until now, you’re awesome and I sincerely hope you stick with us. If you’ve never heard of Process Street, click here to start a free trial and check it out yourself. If you want to follow our story on how we are building our startup and helping companies be more productive, subscribe to our blog.

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Vinay Patankar

CEO and Co-Founder of Process Street. Find him on Twitter and LinkedIn.

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