Free or Not Free: 7 Factors to Consider Before Deciding on a Pricing Model for Your B2B SaaS

Is "Free" the way to go for your B2B SaaS?

Think twice before offering a free version; it may not be worth it.

Here's seven things to consider…

🧗‍♂️Your software requires a lot of onboarding or services to get a customer to value. Free users are fickle, and they need to be able to get in, get going quickly and get to realized value quickly.

🎯 Your target market isn't huge. It's going to cost a ton to get a small market into free, not to mention that the few who do want it may get enough value from the free offering, so they may never upgrade. Free is a volume game.

🐳 Your target market is a blue ocean, meaning it's a fresh offering for an underserved market which usually means they aren't aware they even have the problem you solve yet. You'll be doing a lot of education in this market, and it is often better served with a sales-led strategy, at least initially.

👀 You aren't monitoring feature usage. If you can't watch for the signals that someone is ready to move up to a paid plan, stay away from a free model until you can; otherwise, you'll be flying blind and confused as to why customers aren't upgrading.

⛑️ You can't support a high number of free users. Free can be expensive for you; if you are not prepared to, or able to, offer support, self-serve or otherwise, to your free users, it will be hard to get people moving in the right direction.

🤷‍♀️You don't have a good idea of what features and limitations to place on your free plan. Choosing which features and metrics to limit in the free plan is incredibly tricky. If you don't get it right, you could end up giving too much value, and people hang out in the free plan for years, or they may not get enough value, and people just stop using it. You'll need to introduce positive friction with just the right blend of features and usage limits to get people moving to a paid plan.

📱You don't talk to your customers. Free requires a deep understanding of how and when your customers get value. There's no better way to do that than to communicate with them often and monitor feature and volume usage to back it up.

So, It may seem like Free is a no-brainer, but it's important to remember that it's not always the best strategy. Before deciding to offer a free version, gather data to support it and weigh the potential benefits against the potential costs and challenges. So while free is incredibly popular, it's not a silver bullet.

What are your experiences with Free? Join the discussion on LinkedIn here.

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