Don't offer a Free Plan

If you are building a SaaS product it might not make sense to have an always-free offering.
There are real costs associated with a free plan, and not just hosting costs.

This website outlines the considerations and proposes alternatives to always-free plans.

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The costs of a free plan

Free plans are great, they allow users to get to know your product and perhaps they will upgrade to a paid plan later. Depending on your product every free user may add almost nothing to your server bill.

But still there's a real cost.. Your time and effort.

Cheaper users are the loudest

Would you rather have 10 users that pay $100 monthly, or 1,000 users that pay $1?

Although they bring in the same revenue, you can expect more support requests with more users. Also your operational costs probably increase slightly with every user.

Counter-intuitively, the less the user pays the more likely they are to need your help.

Imagine you are DigitalOcean, and you are offering $5 and $500 servers that people can use to host their web apps. A higher percentage of customers renting the $500 server know what they are doing than the $5 customers. And there's probably less of them, so you can devote more time to them.

The customer that pays more may have higher expectations and they are the ones worth your time. This is one of the reasons for the Indie Hackers' motto of Charge More.

Something changes when it's free

There will be a small but loud minority of users that will expect the world for free. When customers don't pay for a service, they have a hard time grounding their expectations to the price. There will be users demanding your paid-plan-only features in the free offering, and they may write negatively about you if you don't comply.

Now consider that your free users will likely outnumber your paid users by an order of magnitude, even that small percentage can become a real time sink.

Most free users will never convert

Many users will never ever pay, regardless of how good your product is and how much of a problem it solves. Perhaps they have no budget or they have a hard time justifying paying any amount for your product - however irrational that may be.

Your SaaS business is not a charity, and your time is wasted on most of these users. You want quality users that (may) end up converting.

Perhaps you want to give back to the community and allow people to use it in hobby or charity projects for free. There are ways to do that without a self service always-free plans, which we'll touch on later.

What are some alternatives?

Trial periods are great

Users like to try your product before they send money your way. Offer a free trial that is long enough to put your product through its paces.

Bonus points if you don't require payment details, as this may increase the friction of an employee of a larger business from trying it out without approval.

Be picky about your free users

It's an admirable thing to offer your service for free for certain projects, such as open source, educational or charity projects. Have these users ask for the free plan and explain their project. It is perfectly reasonable to be however picky you want to be.

Perhaps they can e-mail you, explaining their use-case, asking to convert their trial account to the always-free plan. Or even simpler: write down the requirements without ever checking them.

Offer a lifetime try-out plan

Instead of offering an entirely free plan, offer a lifetime "try-out" plan that has a one-time payment. Don't make it too expensive. Low double digits seems reasonable, or make it pay-what-you-can.

This will weed out users that will never take out their credit card for your product, and still make your product accessible for tiny (hobby) projects with a small budget that don't need your pro features.

I imagine that this will also work better than offering a trivially cheap subscription plan (e.g. $1 per month). Subscription fatigue is real thing, a one-time payment of $19 is easier to make than subscribing to a $1 per month plan.

Make clear to your users what the terms are for this plan. Some tips:

Closing thoughts

Won't I lose out on paying customers?

Maybe, but as a thought experiment try to picture this potential customer and ask why.

Was the trial period insufficient for them? Did they not want to take out yet another subscription? Were they not willing to pay a small amount for a lifetime try-out plan?

Would they have really started using your free plan as a gateway drug, and then proceed to scale their usage into the paid plan?

In my opinion it is worth missing out on this hypothetical customer and not have to deal with countless free users (some of which with unrealistic expectations). Focus on customers that bring in (a lot of) money, that's what you need in a sustainable business.

Why did you make this website?

I am building some SaaS products and this is an important decision. After reading numerous Indie Hackers discussions about this topic I came to the conclusions above. I figured I would take an afternoon to put this up as a resource on its own website.

Perhaps I will one day add a list to this website of companies that offer the lifetime try-out plan I'm proposing.

If you're curious about my SaaS projects, the first is Friendly Captcha, a privacy and user-friendly alternative captcha. Friendly Captcha does actually have a forever-free plan, mostly because it also has the social mission of fighting ReCAPTCHA's dominance.

The second project is Magic Login which is set to launch soon (mid February 2021). There I will probably experiment with a lifetime try-out plan.

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