▲ 272 points
back
84 comments
I think this article is an example of attribution error. To conclude that it is a free model that has caused Canva, Figma, or Notion to take the lead is missing on multiple fronts. To me, the more likely conclusion about these products is that they were better products, and that they created fundamentally different user interactions.
I can't remember where I read it, but I read a great article that argued that Google Docs was successfully not because it duplicated Microsoft Word (many had tried and failed with this approach), but because it focused on how work had changed and the need for collaboration.
Canva is very, very successful, but I don't think that's at Adobe's expense. By any measure, Adobe is probably one of the best examples of a company shifting to SaaS: https://producthabits.com/adobe-95-billion-saas-company/. Also, regardless of whether they offered their products in a SaaS model (Adobe introduced them in 2012 I believe), there was still free trial.
Maybe a better explanation is that Canva tapped into a different audience - people that needed to produce graphics but did not have design capabilities.
On Figma, it seems to me to be a better online collaboration design tool than what has been offered by other companies. The author seems to forget that companies like InDesign existed at the same time, offered a collaborative tool, and had a similar freeium offer.
I won't belabor the point - freeium might have helped these companies succeed, but I think it is a big leap to say freeium = unicorn killer.
I have worked extensively with both Sketch and Figma. And although I find Sketch to have a superior design experience, Figma works better in the context of teams. It's usually also cheaper than the Sketch stack.
Figma offers design, prototyping, developer handover, team collaboration, a.o. capabilities. The basic service is free and the paid tier is fairly priced. All said capabilities are also integrated so you don't have to use plugins or switch between apps. When working with Sketch, I use Sketch for design, Marvel/InVision/Framer for prototyping, InVision/Zeplin for developer handover, and InVision Freehand/Miro for collaboration. This means dealing with multiple licenses, plugins, and copy-pasting assets.
I also worked with a mid-sized company that was paying around EUR 20,000 just for their InVision license (developer inspect is expensive). With Figma you get most of these services (good enough) for a single price.
So money certainly plays a role but Figma's success goes beyond just the pricing model.
What niche is this "Canva" succesful in?
I haven't heard of any of the names in the article, with the exception of Adobe. So the author may be talking about some niche where that Canva is actually better than <whatever Adobe sells this week>.
Possibly some web "content" and marketing niche, considering his vocabulary?
It's odd that they talk about Segment and GA not having direct competition when their biggest competition is actually also Adobe. Via their acquisitions of Omniture and a few other many years ago, they have a very robust marketing cloud offering for analytics, tag management, targeting, ad optimization and all that jazz. Plus enterprise CMS. And they sell it as a package to simplify procurement which is a huge draw. Even though their products all kinda suck.
Anecdotally, my main reason for switching to Google docs was that Office was $$$$. A lot of people collaborate but I doubt it’s anywhere near the majority.
Would you use Google docs if it cost $200 a year?
>To me, the more likely conclusion about these products is that they were better products, and that they created fundamentally different user interactions.
Maybe they are better products, I don't know, but how many people used it because it was free, then realized it was better? How many of those wouldn't have used it if they didn't have a free offering?
> the more likely conclusion about these products is that they were better products
But here's the million dollar question for someone making those products. How do you convince your target audience? With the old business models, you'd spend a few million on advertising and hope for the best. If you have a generous free plan, you'll get people signing up, and if you're lucky they'll use it. Of course you need a good product. A good product is not enough in most cases.
I have used sketch, figma and InDesign over the past handful of years, and for the companies I have used these products at, figma has won hands down.
The ease with which stakeholders, designers and developers alike can work together, either by desktop app or web, is great. Not perfect, but great.
Is this a response to the "Don't offer a free plan" article floating around here somewhere?
Reading them both, it seems the other one is written by a developer and this one is written by a marketing person. The marketing person probably knows more about this then a developer would, but it is fun to see their perspectives. The developer doesn't want to deal with free users demanding resources and the marketer wants to position the product to be profitable.
Personally I trust developers more than marketing people, and I generally have a bit of disdain for marketing folks. They market their trade as exposing the right product to the right audience, but usually what it amounts to in substance is manipulating people. Still, the marketing person's perspective on this particular topic is important to consider.
I think of it this way.
If I was buying some software for work that costs (say) $500 the process involves many steps, including convincing myself I want it and concincing my boss to pay for it (usually.)
It could take days to give a product a fair evaluation but I have to consider the probability is (say) 30% that I get it in the end, so that the invested time might be "wasted". Say I spend 2 days on eval and I get paid $50 an hour, that is $800 worth of time which I could spend on project work, or 'sharpening the saw' in some other way. If I have to look at four products to buy one I am spending $2400 of time to buy a $500 product.
So I think of free trials as 'free as in puppy'.
Speaking as someone who blends marketing/design/technical work I have a few thoughts on this.
First, there's pressure on a lot of marketers to sell more this month or this quarter.
Second, there's an expectation to prove that an idea is good using data and to prove the idea worked using data.
Third, there's very little interest in investing in the art side of the trade.
When taken together, you get what we've got.
What am I trying to say?
I guess just that in my experience it's always been the owners and top level managers pushing for short-term, unethical, bad ux decisions and focusing on manipulating instead of serving people.
And it sucks.
I think a lot of us got into marketing because we're creative and technical and wanting to make businesses and products better for people, both consumers and society at large.
Or maybe that's just me.
Edit: the worst part of it is the demoralizing realization that the owners are often right. Most people actually do want McDonalds, like shopping at Walmart/Amazon, and enjoy Facebook. So I guess the worst part about marketing, the part nobody talks much about, is that giving the majority of people what they want usually means low quality at the cheapest price.
> Personally I trust developers more than marketing people, and I generally have a bit of disdain for marketing folks. They market their trade as exposing the right product to the right audience, but usually what it amounts to in substance is manipulating people.
I hope someday you get to know people who enjoy good marketing like I imagine you enjoy good software, so you can change this view. Imagine a different POV: developers sell their trade as solving real world problems, but usually what it amounts to is overcomplicating things or trampling domain experts opinion in favor of bad assumptions.
As in all professions, most work you'll see around is not work to be proud of. Don't use random sampling to form an opinion about the value of a profession.
I think the 2 approaches can be segmented based on market appeal. Canva, figma, and some of the other examples being thrown around are products with mass appeal. Also products that I imagine don’t really require much customer service. As it’s expected you figure it out yourself with these products.
The dev focused tools, a la the indie hacker type, are usually after some very niche user. In this case, you should just make the user pay. There’s not many of them anyways and you can likely command a higher prices because you’re essentially solving a problem that would require them to solve (expensive) or just keep status quo in place (eg manual process).
This is how I like to think about freemium anyways. If product has mass appeal, eg bookkeeping, then freemium makes sense. If it’s bespoke compliance software tailored just for veterinary hospitals then everyone pays
I think the size of the business is a big consideration in this whole discussion of free plan vs. not. The examples in this article and the other one are big, established, mostly VC-backed companies. I don't think it's a question with a one-size-fits-all answer.
When the company has lots of money to spend on supporting those free users, having the free plan probably makes a lot of sense to grow faster.
When the company is just you in your spare bedroom, there are fewer cycles to spare on the prototypically-needy free customers, so optimizing for fewer -- but paying -- users can be a good trade.
A key aspect of free is the A-Ha moment your users have while using the product. With simple products this moment can be achieved quickly (like watching Netflix for a couple of days, you see the value really fast), with complex products this moment can take quite a while. In our work management SaaS [1] it takes quite some time to see the actual value of the product, we constantly see people converting from free after a year of use :)
What I'm trying to say it, there's no magic formula - you need to understand as well as you can your user base, see how long it usually takes them to understand that you do provide value with the product and importantly check out what your competitors are offering in terms of free plans.
I whole-heartedly agree with this post! I like the emphasis on value vis a vis the free tier upgrade path. Here’s an anecdote about Notion that I posted on the related HN topic “Don’t offer a free plan” [https://news.ycombinator.com/item?id=26059517], [original post: https://news.ycombinator.com/item?id=26060141]
—————
At Notion, we used to have a limited free plan where we only allowed users to create 1000 blocks (pages/paragraphs/embeds/checkboxes/database rows) before we directed them to upgrade to the "Personal Pro" plan. Supporting free users dealing with the block limit was a major headache, just as described in the OP, but more importantly the Personal Pro plan was kind of a dead end - few users converted to Pro, and those that did weren't worth much, since the Pro plan is pretty cheap and doesn't have much network effect.
We took a hard look at that free personal plan and how it worked with our goals. Instead of phasing it out, we decided to make it unlimited - now personal users can make as many blocks as they want [https://www.notion.so/personal]. But importantly, we also switched up our segmentation at the same time: we restricted the personal plans' collaboration model and created a new "Team Trial" plan, with the same 1000 block limit, but with all the teamwork features included. Another thing to note about our Team Trail is that it's not time-limited at all, teams can keep trialing Notion until it has clear value to them. We have many fewer users frustrated by the block limit, but those who are are much more valuable, and are getting a lot more out of Notion -- when they upgrade, it's to a Team plan with strong network effects and a path to future expansion.
And all those (now) very happy users on the free plan? They're like jonpurdy [https://news.ycombinator.com/item?id=26059666] - they'll take Notion into their (future) teams and workplaces, even though in the shorter term they're a strain on our systems.
My advice is - there's more nuance to this than "MAKE IT FREE" vs "DON'T MAKE IT FREE". Think about how you structure upgrade incentives around value, and about how your free plans fit into your overall market strategy.
Slack was the "aha" for me on understanding an underlying mechanism here for freemium->paid.
Freemium needs to cover trialing up until the point of an adoption decision. However, the adoption decision isn't about continuing to use the tool. We're in a 'prosumer' world, so the purchasing decision flip is instead about when a user both operationally and mentally phases from b2c -> b2b, meaning changes both in how they're using it and the value they're noticing.
Ex: In Slack's case, it is a team liking it enough that they start having substantive conversations, and when prompted, view paying for a search history to be more than reasonable for a work environment. If they aren't getting commercial value from those comms, they can keep using for free until they do.
Ex: In ^^^ Notion's case, a 1000 block limit may not signify anyone cares beyond entertainment value. But as soon as you want to do secure sharing with colleagues for a lot of work, you're probably doing valuable stuff, and are fine paying as long as reasonable.
Ex: Twilio is ~free for developers as they prove value, but org pays when it gets real.
So it is less about trialing -> addicted, and more about trialing -> committed & appreciates generated work value. The lazy version of this is "addicted individual -> addicted team", so I expect pricing models to roughly follow that. Sort of like a modern version of "Enterprise means SSO so charge more for that", except now more closely aligned with utilization... which is a good thing.
Not that you wrote it, do you think the article means to say Notion has unseated Confluence? Do you agree? :)
Yet another marketing article masquerading as an "expert opinion". The real reason Figma wins over Sketch, which is superior as a design tool, is not the freemium. Multiplatform availability and collaboration are the selling points. But if Figma wants to expand market share, soon or a later they must go native.
Interesting take. I haven't used either Sketch or Figma that extensively for quite a while, so take my opinion with a grain of salt.
It was my feeling that Figma lacked some of the finess in terms of finer vector drawing and advanced features that Illustrator or Sketch provided but was "good enough" in 99% of use-cases that it didn't realistically matter to their target customers. There are some parallels to the Google Docs X Word relationship I think.
Edit: I read your comment wrong and removed part of mine to make sense. We're basically in agreement.
Copy pasting my answer from "Don't offer a free plan":
When it comes to B2C, prescriptions don't apply uniformly, or for that matter scale. Beware.
My only suggestion would be that be honest with the value proposition of your product. Know that your electron-based note-taking tool is not the same as the entire g-suite or ms office.
And finally, remember that no one is more emotionally invested in your product than you are. So let the suggestions trade.
Plenty people arguing for a free plan in the "Don't Offer a Free Plan" thread
This is an interesting post that puts more thought and words into something I would consider doing but don't have any depth of understanding. I may not agree with all the points and certain cases may be counterexamples but I very much appreciate having it clearly presented to be discussed or evaluated for a purpose. For my own reference, quote:
> How Freemium really works [...]
> In reality, there are a number of different ingredients in the recipe you need to nail before you can actually execute a freemium strategy effectively. You don’t need a team of hundreds of people, but it does help to lay out the strategy ahead of time.
> Let's break out the different factors involved in setting up a freemium plan.
- Pricing that scales with usage
- Shareable content
- In-app upsells
- Massive market opportunity
- Pricing innovation on the primary value
Whether to go with a freeium model is another "it depends" topic and there's too many factors to give general advice, the same for questions like "How much should I charge for my product?", "What's the best way to market my product?" and "What framework should I use to code my product?".
I run a freeium Chrome extension (https://www.checkbot.io/) for checking website SEO, speed and security factors where I have the free plan without sign up for multiple reasons 1) low friction so users can try it out first 2) users may be more likely to share and recommend it for quickly checking website issues 3) there's free tools in this space so it may be harder to ask for payment upfront. I'm generally not finding the cost of the free users high.
For another product though, all these factors might be weighted differently which would tip the balance on a free tier making sense. It depends on too many things e.g. marketing budget, competitors (how entrenched they are, how much they offer for free), how much a user needs to try out your product before they realise they need it, differences between free and paid plan, if your product appeals to teams or individuals, support costs.
This. If you offer something very very simple where the way it is being done is much more important than what it is (e.g. a innovative text editor that solves precisely the same problems as other text editors but in a slightly more convenient fashion) then offering a free tester makes a ton of sense. There is too many text editors out there and getting people to understand why they should even consider paying money for yours is a important part of getting the money in the first place.
When your product however solves a very unique problem and is the only product that does that, you don't really need to do such a thing, because the why is self explainatory. E.g. you wrote a format converter that allows users to transfer basic audio projects between all kind of proprietary DAWs. This is so self explaining that only people who have a pressing need to solve that problem will pay for it anyways. And because there is not too much competition in that market you don't have to demonstrate why your solution is slightly better than $trustedopensourceprogram
> Massive Market Opportunity
Ah boy do I wish reading an article like this few years back. This point is exactly what we missed when offering a Freemium plan to users. It doesn't work for products that, by design, are built only for a specific set of users.
> First, if you are missing even one of these, it might not be the pricing strategy for you
Yup. Freemium is for you only if you can to tick _ALL_ of those boxes.
> It doesn't work for products that, by design, are built only for a specific set of users.
Exactly, freemium does not make sense if you have a limited niche of potential users.
While most of the thought within this article is totally accurate and very useful, it’s important to acknowledge that killing a unicorn is even more rare than finding a unicorn. It’s important to acknowledge that freemium is a high-risk strategy requiring a lot of “just right” environmental circumstance.
This is a nice article, echoes my thoughts a little better than the other post [1] on thd front page right now.
That said, there are strong competitors to Google Analytics, that's the one take I don't agree with.
With Portabella (https://portabella.io) we've gone the restricted free tier route. As a bootstrapped company we have to make that tradeoff between wanting users but also safe guarding against abuse.
Cool product, I think I've seen it pop up on HN before. How do you balance user privacy while collecting data on usage? Do you have your own privacy-friendly event tracking system, maybe something self hosted?
That's a very naive article, pricing strategy is almost never the reason a company succeed. Some companies offers a free plan some don't. In both of those case some companies are successful. If you are wondering what pricing strategy you should do, just do whatever you feel is the good way. Usually in b2b enterprise there is no free plan, but look at Segment they have a free plan. Usually in b2b smb there is a free plan (I can't think of one which don't have it). And usually in b2c there is a free plan , but look at Netflix they don't have one
I’d never heard of Canva before and, taking a quick look, based on its feature set I don’t see it as a competitor to Photoshop or Illustrator really.
Canva seems all about taking an existing template and swapping in some new photos and text. Of course, this is very useful and I’m sure there’s a huge market for such functionality when creating Instagram posts, etc.
But it’s very different from full-featured image editing (photoshop) or authoring complex vector graphics (illustrator).
I'm going to create a "Free" service where you can just "freely" choose to stop creating these totally useless and backward pieces of production art.
Then, you might see the unicorn out there in the mist... the UX person who can actually just "make the prototype" and the design system - instead of inspiring hundreds of useless meetings to deliberate over a flat perversion.
I like paying for things. Good things. And when I pay for good things... (and they are managed well) - they inspire people to make more good things.
This whole "Free" thing... is costing us all - big time.
What I try to do for my application, all offline features are free and features that talk to the backend are paid. Of course that won't work for every type of application. The idea is that only paying customers generate any cost (aside from bandwidth to serve the application resources).
For example, full-text search would be paid features, while a simple search that can be done reasonably on the client would be free.
First sentence threw me... who have Canva unseated?
Free plans sometimes work and sometimes don't. A good example of where they (at least seem) to work well is Calendly. Every time you use the service you advertise it (even when on the free plan), and if I had to guess, a good amount of people eventually become paying.
I offer freemium in my b2c app https://stockevents.app with a hard limit on the amount of stocks the user can put on their watchlist and its working great. 10% of my active users are paid users.
I love the freemium model for SaaS because it's an easy way to start and test a SaaS before buying into it. Also, when you start small, you don't have that much money at hand. It feels fair to pay once you have established your business at a larger scale.
You get what I'm trying to do here with my recent essay:
https://www.remarkbox.com/remarkbox-is-now-pay-what-you-can....
When it comes to freemium, what are the pros/cons of doing a limited-time (but fully-featured) free trial, versus a feature-limited (but not time-limited) free tier?
Probably the simplest middle ground between do/don't offer a free plan is: offer a free plan, but be very clear that any kind of support, feedback, contact etc can only be reached via a paid subscription.
This works well in e.g. AWS where I often temporarily pay for a subcription while I'm having an issue. This weeds out for them many low-value, high-maintenance users.
(AWS in particular cannot be very blunt so it's still possible to get support without paying specifically for it... but when running a small business, please be blunt)
Who has to google "photoshop"?
Also, Canva seems more like a "Publisher" killer. But Publisher was already dead.
Does the article conflate overtaking an incumbent's product in market share and overtaking it in Google trends? I don't think these are the same things. They would if both relied almost exclusively on Google searches / ads / SEO as a channel, but I don't think Adobe sells the same as the other companies. It may not care about Google trends / SEO because it does enterprise deals. They have the sales people to do that.
Adobe has gone +50% from 2020 to 2021, and the trend seems to keep going up. I'm not attributing that to Photoshop, though.
Second, a company may have millions of users and still have no/little/less revenue. This also often would mean no support. That could be fine with a certain category. Many of the companies cited in the article are private companies, so we don't really know much about their finances.
>Microsoft Teams: Slack
>Well...they don’t. Baremetrics sold. Slack sold. You can’t compete against freemium when you’re able to offer the primary value for free. The existing market leaders can’t match your pricing without giving up millions in recurring revenue and they’re not going to do that.
Slack does have a free tier. Am I misunderstanding the paragraph as meaning that Slack lost because it didn't have one?
The freemium model can be interesting if an additional user is one entry in a database, and you don't incur that much cost from usage. For example, we make a machine learning / MLOps (oh yeah) platform at https://iko.ai. Users train models models on data, which means GPU, RAM, and storage. Unless you are venture backed and can spend money on free users to onboard a lot of users fast, it's not sustainable. We're not venture backed, and we're not really looking to be for now, which means our clients belong to a different segment.
Now, it is not excluded that the revenue generated thanks to these paying customers will subsidize free users, and we are engineering our way out of this conundrum. But someone has to pay for all that compute. One of our colleagues was supervising about thirty students doing their final year projects in machine learning, and we let them use our platform to be able to complete their projects and get their degrees. We provided support that you'd find in an enterprise offering, and we spent a lot of nights hanging out in the Slack channels helping them troubleshoot and optimize their code, giving guidance on how to train and use the models, seeing it through their graduation. You can't really generalize that level of support for all free users, and when it came to students, we couldn't just shrug it off and not support them just because they were free users, as this was personal.
I'm in! Free users are the loudest, they complain about everything and are a huge distraction.
I have offered a free plan for my SaaS from day one, with quite generous limits, on a niche with mostly paid-only alternatives. I think it comes down to tradeoffs.
As a self-funded solo founder, this has helped me gain many users since launch, which give me plenty feedback and help to validate new product features without having lots of marketing effort so far.
I don't sell any data, or display ads on free accounts. The reason to upgrade is more capacity, or complementary features for business users (e.g. alerts or organisation/team accounts).
That said, a couple of things to consider:
- Do your numbers: if you have 100 free users for every paying customer, are you going to be profitable? Can you handle the costs?
- In my experience, free users tend to attract more free users.
- They can generate a lot of support pressure, but handled right can be a great way to understand your customers problems. Handled wrong can kill you.
- Expect a small percentage of free users to cause the most trouble. From creating several accounts with different email addresses, to publicly complaining about the free plan being limited, to requesting lots of features only to switch to another free product once it's time to upgrade.
- If you're targeting B2B, price might not be as much of a factor as you might think. Are you going to save or make money for other businesses?
I could talk more about this, but will probably write a blog post one day with more learnings once I have them.
I’m happy to offer a free plan as long as it’s sustainable and I can see the benefits. So far it’s going great for me, but know what you’re getting into, and be sure you can handle the costs both in time and money with low conversion rates vs a trial model.
Edit: I moved the comment to this discussion as it's more fitting. I removed the link to my product.
Gotta love hackernews!
Here's my improved answer from previous - "Don't offer free plan" post.
I recently shut down my free plan and instead introduced Trial on paid plans for my SAAS [1]. Brought in a new entry-level plan that is significantly cheaper to make the transition easier.
As an indiehacker, the free plan allowed me to iron out bugs and improve the overall experience of the platform. But the amount of effort it took to maintain the free plan was enormous so, I shut it down. I informed users about the decision and, I am glad few converted to being paid customers.
The most difficult part was to convert free users into paid ones. I tried everything - Coupons, discounts, emailing customers, lowering the limits, limited offers etc. Nothing really worked.
I have a lot of free time now and I can focus on delivering value to my customers. The server load has also reduced due to the reduction of free requests and database writes/reads.
For a large SAAS company like Slack, Trello etc, it makes sense to have a free plan since you have a lot of resources at your disposal but, if you are a small team or worse alone, then hell no.
[1] http://blanq.io/