Jon MacDonald’s Post

Freemium feels like a no-brainer? No friction, no upfront cost — a low-risk way to try your product? Not that easy. Freemium has become a go-to strategy for many SaaS companies. It drives mass adoption, builds a large user base quickly and helps spread the word. But it comes with costs — some visible, some not so obvious. If you look at different revenue models — from ownership to usage-based and freemium— there’s a clear correlation between lower buyer risk and declining price. Moving from ownership models (where the price can hit millions upfront) to consumption models or monthly SaaS we see the price drastically decrease. And your win rates & conversion rates also fall down. The easier it is for a customer to get into the product the lower the likelihood of converting them to paid. With software that you own, where the buyer invests heavily upfront, win rates are around 1:3. But for freemium, it can drop to 1:100. That’s a huge difference. On one hand, you’re lowering barriers and allowing a larger number of people to experience your product. On the other hand, unqualified leads flood your funnel and your sales team can waste time chasing prospects who may never convert. Spotify and Slack have managed to drive conversion rates as high as 1:5, but these are exceptions rather than the rule. For most of us the free-to-paid conversion rate hovers between 2-5%. But there are few principles that can help: 1. Freemium works best when users can access enough value to get hooked but still see a clear reason to upgrade. The sweet spot lies in providing just enough for users to see their problems solved without giving away too much. Multi-year SaaS can drive retention by locking in users but this limits pricing flexibility. Freemium offers flexibility but lowers initial returns. 2. Freemium users will only convert when they hit a point where they need premium features/ more volume. You need a system that identifies when users are approaching that point and nudges them toward the upgrade/ upsell. 3. Freemium is the huge volume of users. Even if they don’t convert, free users can be your brand ambassadors. So you can be leveraging satisfied customers to drive growth through referrals. Network effect in action. 4. Supporting free users can drain resources if you’re not careful. Systems that work for ownership or high-value SaaS don’t translate well to high-volume freemium models. You’ll need scalable no touch support systems — AI chatbots, FAQs and community — to keep costs down while ensuring users feel happy. Freemium is a long game. And it is not for every type of business. It’s not just a strategy to fill the top of your funnel — it’s a system that needs constant monitoring and optimization. Freemium can build a strong community, generate user data and create a long-term sustainable pipeline for growth. The key factor is building a systems that support it — from data-driven upsells to scalable support and customer referrals.

💡Unlocking Growth with Freemium Models for SaaS! For SaaS companies, freemium models have become a powerful tool to drive growth and attract users. By offering a basic version of a product for free while charging for premium features, SaaS businesses can create viral growth loops, build network effects, and encourage organic word-of-mouth marketing. The key to success? Balancing free and paid features, creating ‘aha’ moments that demonstrate real value, and using product analytics to optimize user journeys. While freemium models present opportunities, they also require smart management of support costs and careful attention to avoid cannibalizing premium offerings. When done right, freemium models can unlock massive growth potential in today’s competitive SaaS landscape. #SaaS #Freemium #StartupGrowth #DigitalStrategy #CustomerRetention #ProductGrowth #MarketingStrategy

The freemium model has become a popular choice for SaaS companies, offering a free tier alongside premium features. But is it a friend or foe for your business? Let's explore the pros and cons to help you decide. The Allure of Freemium: ✅ Massive User Acquisition: Free tiers attract a large user base, letting you showcase your product's value and build brand awareness. ✅ Reduced Friction: Removing the initial paywall lowers the barrier to entry, encouraging users to try your product with minimal risk. ✅ Valuable Customer Insights: Free users provide useful data on usage patterns and pain points, informing product development and future pricing strategies. The Freemium Foes: ❌ Cannibalisation Concerns: There's a risk that free users will be content with the basic features, never needing to upgrade to premium plans. ❌ High Customer Acquisition Cost (CAC): Attracting free users is easy, but converting them to paying customers requires a strong value proposition and well-defined upgrade paths. ❌ Resource Drain: Supporting a large free user base can strain resources, impacting customer service and product development for paying customers. Freemium Friend or Foe? It Depends... The success of freemium hinges on careful execution. Here are some tips to make it your friend: → Clearly Define Value Tiers: Ensure the free tier offers enough value to be useful but not so much that it replaces the need for premium features. → Focus on User Engagement: Effectively onboard free users, highlight the limitations of the free tier and showcase the benefits of upgrading. → Track and Analyse Data: Monitor user behaviour and identify pain points that premium features can address. Tailor your upgrade messaging accordingly. The Takeaway: Freemium can be a powerful tool, but it's not a magic bullet. Carefully weigh the pros and cons and ensure you plan to convert free users into paying customers. You can unlock massive user acquisition, valuable data, and a thriving SaaS business by implementing a smart freemium strategy. What are your thoughts on the freemium model? Have you had success with it? Share your experiences in the comments! #saas #pricing #freemium #freemiumstrategy

[SaaS Pricing Innovation: The Reverse Trial Strategy] Until recently, pricing models in the SaaS industry were mostly split into two types: Freemium vs Trials The freemium model offers basic features for free with an option to upgrade for access to additional features. This approach aims to secure a diverse user base through free plans, leveraging the power of word-of-mouth and making it easy to acquire new users. The trial model allows users to access all features for a limited time (typically 14 days), after which access is restricted unless payment is made. This model tends to have a 2-3 times higher conversion rate to paid plans compared to freemium. Additionally, due to the time limitation, it tends to have a somewhat higher user activation rate. However, there's no longer a need to choose between the freemium and trial models. This is because of the emergence of the Reverse Trial strategy. The Reverse Trial informs users that they've been upgraded to the full version for a limited time (14 days) and if they don't choose to upgrade at the end of the period, they revert to the free plan. Airtable has successfully utilized this strategy to dramatically improve paid conversion rates and user onboarding. Elena Verna, a B2B growth expert and advocate of the Reverse Trial, observed an increase in conversion rates from 10% to 40% across various freemium businesses where this strategy was implemented. SaaS leaders grappling with pricing strategies should definitely take note. P.S: Personally, I believe the reason why the Freemium model has become less effective is because there's an abundance of SaaS services now. Looking back at the early 2010s when Freemium models like Slack were very popular, nowadays it's harder to stand out among the many services available. So, it seems like it's time for a change in pricing strategies. Reference(https://lnkd.in/dZ5mv6QQ) #pricing #GTM #strategy #SaaS #B2B #Freemium #Trial #Trials #ReverseTrial

🚀 10 SaaS Monetization Tactics to Grow Your MRR 💰 Examples from top PLG companies collected over the last 12 months ⬇️ 🎯 Skip Trial Discount Add 'Skip trial' and 'Get a discount' for instant conversions. 💥 Intro Discount Offer a steep discount to new users for the first 1-3 months. 🏷️ Price Anchoring Add a very expensive plan next to your more affordable options to create contrast. ⏳ Pre-announce Price Increase Create urgency by announcing a price increase in advance. 🔒 Change Limits (in freemium) Tighten freemium restrictions to encourage more paid conversions. 🛠️ Change Defaults Include add-ons by default to boost Average Revenue Per User (ARPU). 👥 Change Minimums Increase the minimum number of seats required for a plan. ⚖️ Change Pricing Metric Alter how you measure product usage to better align with customer value. 🔍 Use Case Specific Plans Develop plans tailored to specific use cases. 🔄 Swap Plans Reorganize your current plans and adjust pricing to reflect new value. ----------- Questions? Comment Below. More details? Got to PricingSaaS. #SaaS #PricingStrategy #Monetization #MRR #GrowthHacking #Startup

Growing SaaS product is a battle of saying no to things, Here’s how to say NO to right things, We are a bootstrapped business and we always have to choose which battle to fight, It becomes more tricky when selecting the right features to build, So we ask our self just one question, “Does this help our users achieve their goals in a better way?” Simple question has removed lot of things from our roadmap. Supergrow is a Personal branding tool, Anything that doesn’t help users improve their LinkedIn growth is a vanity feature. Want example? here’s one, We never had request of this feature but we know user need it, The feature was “Multi-auto-comment” What it means? You can schedule multiple comments on your post that goes out at the set time. There are many big creators that use this to do increase engagement on their posts and it really helps drive conversations on the posts. But no one ever asked for it, We did our own research and decided to launch this, Because feature will actually help our user grow on LinkedIn while saving time. And that’s the only parameter that matter: User growth What do you think about the “multi-auto-comment”? Are you interested in using it? PS: Check out the comments to see how it works.

If you've worked in SaaS for any amount of time, then you've heard about "crossing the chasm". And, to be fair, the leap to the Early Majority isn't an easy feat for anyone to make - just look at the Apple Vision Pro. But, what has always irked me about the SaaS narrative around it is how it's a destination that is mere pluck, grit, and product innovation away. In reality, the reason many products fail to find their way to the early majority is because their solution was not solving a real problem, for which there was real and meaningful demand. But in SaaS we all want to be the disruptive, discontinuous technology that comes along and changes how things are done. In any other industry, taking a product to market with the level of research put into a the average TAM analysis would have you reprimanded, shamed, and ostracized. The Innovator audience, even the Early Adopters, are not necessarily representative of your addressable market as a whole - unless you've got compelling market research that shows otherwise. Some products never leave the innovator group because they are interesting to play with but ultimately a novelty alternative to other options out there. This might sound like a real negative outlook on what is generally an idealistic industry, but this industry has invented its own economic rules, its own forms of marketing, and gambled on people's livelihoods in the pursuit of a massive market, based on little more than confidence and a good pitch deck. Great and enduring SaaS companies don't happenstance their way to "Product Market Fit". They find real problems to solve, and build strong brand reputations for solving them. And Product Market Fit isn't some elusive hidden treasure that you'll eventually find if you work hard enough. It's there or it isn't. You solve real problems or you don't. Invest in research. Build a brand. Learn the fundamentals and trust in them. The classics are as true as ever, even if they don’t feel very disruptive.

Freemium: The Cash-Burning Path to Conversion Gold in 2024 The SaaS landscape is ablaze with innovation, but one strategy continues to reign supreme: Freemium. While it's a well-known fact that freemium models can be cash-intensive, the long-term benefits in terms of conversion rates make it an undeniably compelling choice for SaaS companies in 2024. Why Freemium Still Rules the Roost 1. Unmatched User Acquisition: Freemium models offer a low-barrier entry point, attracting a wider audience and generating organic growth through word-of-mouth. 2. Data Goldmine: Free users provide invaluable insights into product usage, preferences, and pain points. This data-driven approach fuels product refinement and targeted upselling. 3. Higher Conversion Rates: Users who experience the product's value firsthand are more likely to convert to paying customers, often with a higher average revenue per user (ARPU). 4. Stronger Customer Lifetime Value (CLTV): Freemium users are more invested in the product, leading to increased loyalty, retention, and ultimately, a higher CLTV. 5. Navigating the Cash Crunch While the initial investment in a freemium model can be substantial, strategic planning and optimization can mitigate the burn rate: 6. Tiered Freemium: Offer different tiers of free plans to balance user acquisition with revenue generation. 7. Efficient Resource Allocation: Focus on core freemium features and prioritize development efforts accordingly. 8. Strategic Monetization: Explore complementary revenue streams like in-app purchases or premium add-ons. 9. Conversion Optimization: Continuously refine the freemium-to-paid conversion funnel to maximize ROI. In conclusion, the freemium model remains a powerful tool for SaaS companies seeking sustainable growth. By carefully managing costs and focusing on conversion, businesses can harness the full potential of this strategy and achieve long-term success. #freemium #saas #conversion #customeracquisition #startuplife

Your SaaS startup's freemium users remain stuck in the free tier, refusing to upgrade despite your premium features. Revenue stagnates as acquisition costs mount, threatening your company's growth trajectory. Strategic content placement can transform free users into paying customers, yet many SaaS founders overlook this powerful conversion lever. Three strategic content placement tactics: • In-app feature teasers • Gated advanced tutorials • Success story showcases Targeted content placement yields powerful results: • Highlights the value gap between free and premium tiers • Demonstrates real-world applications of advanced features • Creates a desire for enhanced capabilities among free users Well-placed content accelerates conversions: • Builds trust by showcasing customer success stories • Increases user awareness around premium benefits • Provides clear pathways from free to paid plans Action Item: Implement one strategic content placement tactic this week to boost your freemium-to-premium conversion rate. Placing your product where people can see it is crucial for your SaaS, especially in a noisy AI era. Here's how to find a place for your SaaS👇🏻 https://lnkd.in/dqxvfqQv

In the past 4 years, I've built a bunch of SaaS products and taken them to market. Some succeeded. Some failed. The ones that made it now generate +$1M in combined ARR. And I learned a ton! Here are my top 5 takeaways 👇 → Distribution first Build a distribution channel before building the product. It could be a LinkedIn audience, an email list, or learning how to run effective ads on Google/YouTube/Facebook (for me, the ads was a game-changer!) → Don't sell features Sell an improvement in your user's life. No one cares about using your product, especially what tech it's built with - they care about achieving something faster/better/easier. → Be omnipresent Try to show up everywhere! On multiple social platforms (big and small), on search results, Reddit answers, blog posts - as many places as you can. And make sure you show up often. You'll be surprised how much you need to "self-promote" - but if you show everywhere, the impact of each touchpoint will start having an exponentially stronger effect. → Create multiple revenue streams Don't just rely on monthly subscriptions. Add yearly plans, consider offering lifetime deals, experiment with usage-based pricing, etc. As your product grows, consider splitting it into multiple smaller Micro SaaS rather than building a monolith. → Reduce live support dependency Your team should never be included in the value chain! Your app should deliver all value by itself without human intervention from neither founders nor team members (that's the "ideal" you should strive for, at least). Instead of support tickets, offer self-serve solutions like AI chatbots and well-crafted knowledge bases so users can find help themselves easily (yes, most users prefer that if it's done right!) Even though it may seem like big, VC-backed SaaS teams have the edge, bootstrapped Micro SaaS still has its place. It's never been easier to enter, experiment, and incrementally build a profitable business for a loyal user base.