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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.
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Snippets
- When you follow someone on Twitter: you choose who influences your thinking. Julian Shapiro created this list of amazing people to follow.
- Disqus, the dark commenting system, is another great example of "if you're not paying for it, you become the product". Unfortunately, in Disqus' case, your website visitors become the product too. Disqus makes 76 HTTP requests and fetches 2MB of data! (even with 0 comments). And, it took 7 seconds to load. And injects 11 third-party trackers to your website. Even in the paid plans, the same pixels are loaded on the client-side. Looks like there's no way to opt-out from tracking. (Source)
- Using an RSS to stay on top of the content? Reddit still offers RSS support by appending /.rss to the end of a given URL. GitHub allows you to add an activity feed of your followed accounts/organisations by clicking the feed icon at the bottom of your account page. YouTube offers RSS support by adding a channel ID (The series of numbers and characters present in the URL of a channel homepage) to the following URL: www.youtube.com/feeds/videos.xml?channel_id=CHANNEL_ID
- Unless you have a never-ending bag of money for paid acquisition, content should be your biggest marketing play. Period. (Tweet link)
- site:docs.google.com/spreadsheets intitle:[anything you want] : it will finds you open spreadsheets with data on anything you want.
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Worth Reading
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LOL the truth.
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