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"Freemium SaaS: the good, the bad & the ugly”  by Nick Franklin @ChartMogul

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Wondering whether you should go Freemium? 

To define your pricing, you must first understand your customers intimately and know how they value your product.

For Saas startups, there isn’t a magic formula. Rolling out a free offer can be risky or rewarding, and timing is essential. ☝

In this talk, Nick Franklin, Founder & CEO of ChartMogul, shares his experience switching to a freemium model. ✨

He covers:
- How to chose your pricing model
- Pros & cons of Freemium
- What to consider when switching
- Results and profitability over time

Nick Franklin is Founder & CEO of ChartMogul, the Berlin-based analytics company helping hundreds of subscription businesses better understand and grow their recurring revenue.

Prior to ChartMogul, Nick spent 5 years at Zendesk, joining in 2009 (as the 9th member of the team) and leaving in 2014 after the company went public. Nick served as Zendesk's head of EMEA region (2 years), followed by head of Asia (3 years) where he oversaw the expansion of both regions from a handful of customers to millions of dollars in recurring revenue.

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"Freemium SaaS: the good, the bad & the ugly”  by Nick Franklin @ChartMogul

  1. 1. FreemiumSaaS The Family Berlin, Sep 12 2017
  2. 2. ABOUT ME @Nick_Franklin nick@chartmogul.com
  3. 3. We make analytics software to help you run a better subscription business.
  4. 4. Two months ago we introduced a free plan for the first time. This probably means I shouldn’t be giving this presentation now…
  5. 5. Pricing is complicated
  6. 6. PRO plan $59 per month per 500 customers Starter plan $1 per month Jan 2015
  7. 7. Starter plan $9 per month PRO plan Starts at $35 per month, with more tiers beyond that May 2015
  8. 8. ESSENTIAL plan $59 per month MOGUL plan $259 per month June 2016 BUSINESS plan $159 per month +$50 per 1,000 extra customers.
  9. 9. ESSENTIAL plan $99 per month MOGUL plan $259 per month Dec 2016 +$50 per 1,000 extra customers.
  10. 10. ChartMogul’s customers Light blue = Customers paying <$100 per month Dark blue = Customers paying >$100 per month Min-price $59 Min-price $9 Min-price $1 Min-price $99
  11. 11. ChartMogul’s ARR Light blue = Customers paying <$100 per month Dark blue = Customers paying >$100 per month
  12. 12. ChartMogul’s customer churn rate Red = Customers paying >$100 per month Blue = Customers paying <$100 per month
  13. 13. The downsides of having a very cheap (vs free) plan… Money sets an expectation of service Customers need need billing/invoicing/collection/etc. These tiny customers cancel frequently, skewing your churn metrics.
  14. 14. We moved away from having the very cheap plan… …but after 12 months we felt we were losing out on something.
  15. 15. Why do a free (or very cheap) plan? 1.Catch the next AirBnB when they’re still tiny
 2.Increases reach and word of mouth effect
 3.Take oxygen away from competitors
  16. 16. There are two main types of freemium. 1. Freemium with soft limits 2. Freemium with hard limits
  17. 17. July 2017.
  18. 18. Launch Plan Free up to $10K in MRR.
  19. 19. Launch Plan - Aims 1. Catch the next AirBnB when they’re still tiny 2. Increases reach and word of mouth effect 3. Take oxygen away from competitors 4. Reduce logo churn rate by no longer selling to tiny businesses 5. Have some fun! (“Sell” to tiny startups, digital nomads, etc.)
  20. 20. 2. Increases reach and word of mouth effect Min-price increased from $9 to $59
  21. 21. 2. Increases reach and word of mouth effect Min-price increased from $9 to $59
  22. 22. Launch Plan - Aims 1. Catch the next AirBnB when they’re still tiny 2. Increases reach and word of mouth effect 3. Take oxygen away from competitors 4. Reduce logo churn rate by no longer selling to tiny businesses 5. Have some fun! (“Sell” to tiny startups, digital nomads, etc.) ? ?
  23. 23. Future success metrics. What % of accounts hit the freemium limit within 6 months? What’s the avg (or median) length of time it takes a free user to hit the limits? What % of accounts that hit the limit actually upgrade to the $100 paid plan? Over time what % of revenues end up coming from former freemium users?
  24. 24. Don’t do it if… Your main channel is going to be outbound. Your plan is to sell primarily to enterprise. You’re don’t strive towards being 100% self-service. Having a lot of inbound flow doesn’t help you much. You’re in a very niche market.
  25. 25. Consider it if… You’re trying to ‘consumerise’ a space. Your strategy is to have a very large volume of customers. You strive towards being 100% self-service. Your support team can handle the expected load. Your infrastructure can handle it. You’re in a large market.
  26. 26. Thank you.

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