Know if your product will benefit more from a freemium or free-trial strategy based on customer, market, and product variables.
Avoid freemium or free trial if your product has the same daily user.
- A sales-led strategy may work better if you need to persuade a single user who uses the product daily versus a team of users.
- A freemium model works well for products that build adoption and habits slowly, like Slack. Freemium encourages adoption, which makes switching more expensive.
Use a freemium model, or a less-restricted free trial, if you have a conversion rate >1% to expand your market.
Use a free trial to restrict access to more committed trailers if your conversion rate is below that threshold.
Use a freemium model to motivate users in popular, saturated markets to try an alternative solution.
If your product is seen as an alternative to a market leader or competitor in the same price range, it’s very likely that users trying it are unsatisfied with their current solution.
By allowing them to test some features for free, you can see which functionalities are considered commonalities, and which features convince users to pay for an upgrade. This can help you improve your positioning and pricing for every target segment.
Use a free trial in untapped markets to gauge your product’s suitability and help users establish new habits.
A free trial allows users to test all your product’s features and evaluate how well your product fits their needs. By giving users access to all the features, you enable them to create their workflows using your product.
By analyzing their usage patterns, you can understand what your product’s top features and differentiators are from a user perspective.
Use a freemium model if your target market has tens of thousands of potential users.
A freemium model requires a large, engaged market with a strong referral network to generate indirect monetization.
Avoid a freemium model if your product is the “high-value product” in your market.
A freemium model can devalue a high-end product or brand.
Use a freemium model to reduce customer service and onboarding costs.
You can test usability and onboarding of your product to determine the amount of client independence.