Why you should avoid free plans in SaaS most of the time

Buzz Team

@saasbox

Free does not always serve your SaaS strategy. It can work against it

It is very tempting to include free plans in a SaaS for multiple viable-looking reasons: How would the user see the value of your solution and decide to pay for it if they cannot use it first? Free means lots of users and lots of users may mean growth, idea validation, and a chance to make profit in the future. After all, if a small percentage of your 1 million free users switch to paid, it will be a lot of revenue.

The reality is, while free plans can have their uses, they must be used with caution and with careful planning.

Free plans will create publicity or word of mouth, but come with a ton of false data points such that they create a lack of clarity if there is a business or not, make you serve the wrong customers, create an extra unneeded burden on the team. More often than not it is best to start with paid plans, and introduce free plans only when the unit economics are clear, and the free plan is a "later stage / post product market fit" growth tool for getting a calculated return on publicity, branding, word of mouth, marketing. We hope that this small bit of wisdom helps to make the decision of having free plans.




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