How to Leverage A Freemium Model to Grow Your SaaS Business

[Shakhawat]

Freemium. Many companies shy away from it — thinking, surely offering my product for free is the best way to send revenue down the drain, right? — but the freemium model has proven to be an incredibly powerful channel for growth in the SaaS industry. Don't trust me? Watch the video to find out what Ashley (Minogue) Murphy from OpenView, an expansion stage venture capital firm, has to say.

Companies like Slack, HubSpot, Wistia and Drift have vnpay database all implemented a freemium model to great success, so don't be squeamish about offering a version of your product for free. The freemium model is a little difficult to put into place, but ultimately, it works because you have a great product that the right customers will inevitably want more of.

Because it allows customers to extract value from your product as quickly and easily as possible, freemium is an integral part of product-led growth. Once you have those free customers in the door, you complete the flywheel by continuing to supply them with marketing materials encouraging them to purchase the paid version. In essence, you treat your free users like customers and the paid upgrade as an upsell, not an initial sale.

Of course, you shouldn't go into freemium blind. To ensure a profitable model for your business, there are a few things you need to keep in mind.

How to Leverage A Freemium Model to Grow Your SaaS Business
1. Define the core value of your product.

A common concern companies have about freemium is: What if all my users stay on the free plan forever? What if they're never compelled to buy the full product?

Every company that has successfully — and profitably — implemented the freemium model has one thing in common: They're able to clearly identify and control the core value that their product provides.

For example, Wistia's core value lies in the number of videos you can host on their platform. The free version allows users to host three to five videos, and although other features come with that, the main feature provided in paid upgrades is additional videos.