5. Price for Success

Historically, trials had a limited time. Team gave customers a limited time to make up their mind about purchasing the software.

If they didn’t make up their mind in that time frame, the sale was considered lost. (In practice, Salespeople scrambled to manually extend the trial for the most promising customers so they could take more time.)

The best companies started to see the flaw in this and created a generous useful free tier for their customers.

This is now called Freemium.

Designing Your Freemium Model

Freemium is, in effect, a permanent free trial. Some features are left free forever, while the product team works to create feature sets that customers are willing to pay for.

Freemium works because it supports the buying journey and what it takes to make a sale decision to its logical conclusion.

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Here are a few tips on designing your Reverse Freemium model:

Be generous

Your free tier must have enough features to be useful, otherwise the customer will never become hooked on the product.

Treat free customers as “top of funnel” prospects

Free customers are far from being useless. They provide many advantages, including a large top-of-funnel into which your sales team can try to convert paying users. Additionally, free customers may add to the virality of your product (more on virality later in the worksheet)

Start users off on “Premium” trial

When customers start for the first time, give them access to a premium tier of your software, not the free tier.

When their trial expires, their functionality shrinks to the free tier.

Customers, who are hooked on the more powerful functionality by trial end, are often inclined to keep it and thus pay for the more premium tier.

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