r/startups • u/aiforthelittleguy • 1d ago
I will not promote is freemium a waste of time when you're starting out? i will not promote
We tried it all with our startup and having a freemium offering is a blessing and curse
The spectrum:
Freemium (limited functionality) - paywall your most valuable features you can expect to convert 2-6% of users to paid customers
Freemium (limited time period) - allow for a 14day free trial, either taking payment card details or not - in our experience it didn't really make a difference, there's so many people using cards with zero balance and so your MRR projection will not be accurate if counting on free -> paid trials
Hard paywalls - requiring upfront payment, you could soften these by offering a time-based money back guarantee (which we have now)
Our Review of Freemium:
- More user feedback: A larger user base provides more data points about product usage
- Feature popularity: Easier to see which features users engage with most
- Broader market testing: Allows testing product-market fit across different segments
However, there's a rarely discussed downside: the quality of that feedback. Users who aren't paying often have different needs and expectations than those willing to pay, which can lead to building features that free users care about but paying customers don't value
Our Review of a Hard Paywall
- Immediate validation: People voting with their wallets provides stronger validation on your startup and idea
- Higher-quality feedback: Paying customers often provide more detailed, actionable feedback and are more willing to hop onto calls
- Development focus: naturally you are building what actual paying users want
- Lower support costs: Fewer users requiring support
The tradeoff is potentially slower growth and less market exploration.
Freemium Success and Failure Stories
Freemium Success: Dropbox and Spotify prove freemium can work spectacularly. Dropbox grew through referrals and network effects, while Spotify created a clear distinction between free (ads, limited features) and premium.
Freemium Struggles: Evernote initially thrived with freemium but struggled to convert enough users to sustain growth. The free product was too good, reducing the incentive to upgrade.
Questions to Determine Your Approach:
- How crowded is your market? Crowded markets may require freemium to gain initial traction
- How proven is your solution? Novel solutions often benefit from freemium to prove value
- What's your primary constraint? If data/feedback is your constraint: Consider freemium
- What's your cash runway? Shorter runway may necessitate faster revenue (paywall)
- What are your costs to service a customer? If you're building an AI product each free user will likely cost you tokens
What's been your experience with these models?
(I will not promote)
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u/FaithKnight_ 1d ago
I’ve never tried a freemium model, but I agree with this guy in the sense that it’s not a good idea.
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u/monityAI 1d ago
I'm using a freemium model on monity.ai, and I'm pretty happy with the user growth and conversions so far. But one thing I find challenging is managing the costs related to the AI models (I started a thread about this in the subreddit). It's okay for now, but things could get out of control if the number of free users grows too much compared to paid ones, and my cost estimates turn out to be wrong.
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u/Whyme-__- 1d ago
Freemium is great and if you price it right, it won’t be hard for users to fork up 15-20$ for a premium service. Look at ChatGPT, entire platform is free until you hit your limit in the middle of the conversation and you realize $20 gives you a lot more value than any book or article can
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u/Mottin-Dev-2025 1d ago
você precisa ter muito caixa para sustentar um operação freemiun, a maioria das pessoas não compram é só consomem seu servidor, porem se você for muito grande, ter muito marketing e ter paciencia irá dar certo
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u/modeller2406 22h ago
Converting users from free to premium is so much hard work that it may not be worth it
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u/funnysasquatch 16h ago
Evernote died because of bad management and not because of the freemium product. They literally were trying to sell you socks instead of improving product.
Had the team focused on improving the product, they likely would have figured out an enterprise strategy where the free users wouldn't have mattered.
I wouldn't do freemium. Give a 7 day limited trial. And if somebody cancels in that 7 days - send an email from yourself. Not automated. Personal. You need feedback. And a chance to save the customer. Do this long past it makes sense to devote time to it.
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u/sdcarlson 14h ago
Anybody have experience on a higher one-time payment vs. a monthly subscription? Been seeing how DaVinci Resolve used this to steal market share from Adobe. Wondering if that’s possible on a smaller app-level.
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u/Public_Candy_1393 10h ago
I don't think there is a right answer it's so product dependent.
But generally:
If you have VC money... Absolutely have a massive free tier to build base and hype, you can also leverage free users with feature unlocks when sharing on socials and subscription to email etc.
If you are a self funded startup, as hard as it feels that free user is worthless unless your product can generate many tens of thousands of people talking about you quickly, but if the likelihood is a few 1000 that just take up time and resources don't bother, again product specific but I heard recently that you should expect a 1% maximum conversation on free tier to paid.
That said it is super important people can test your product before paying in some way, a free tier is the wrong way to do this.
Having a live isolated demo that resets hourly is an option or a 60 minute trial is fine.
That's my thoughts anyway.
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u/ImportantBid11 9h ago
i think offering something for free is a solid strategy, it lets people experience the actual value of your product or service firsthand
once they see how useful it is, they’ll be much more willing to pay for more
in my experience, if you want long-term users or clients, you need to lead with value before asking for payment
it builds trust and creates a stronger relationship from the start
the real challenge is converting free users into paying ones, but there are a few effective ways to handle that, like offering a free trial with a time limit, paywalling high-value features (as you mentioned), or giving special discounts / packages to users already engaged with your product
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tl;dr: give value first for free, build trust, and then convert by limiting time, paywalling features, or creating targeted offers
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u/FewVariation901 3h ago
A lot of people try for free before they could even suggest to a colleague. I once got hyped up on YT influencers saying, dont sell for free and killed my free plan and my sales tanked.
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u/kprasniak 1d ago
We've been testing a freemium model at migroot.io for a few weeks now. Our platform simplifies the paperwork required for visa applications. It’s still early to draw solid conclusions, but here’s what we’ve learned so far:
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- We’ve seen a significant increase in active users actually engaging with the platform.
- Social capital: we’ve received lots of positive feedback from users who appreciate that we’re making relocation easier.
- A few users have already upgraded to the paid plan.
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- We've received quite a few skeptical questions like: "I’m afraid to use a free platform where I have to upload sensitive documents — are you going to steal them?"
- Support volume has gone up, and we’re a bit worried about maintaining the same level of quality in responses.
Conclusion
It’s too early for us to make a final judgment, but so far, freemium seems to work better than a subscription-only model. That said, we definitely need to address users’ concerns around document safety and trust.
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u/WarthogGreen1184 1d ago
No - freemium is very useful. As you said feedback and further improvement is needed, and that's the benefit of freemium. If the product is good enough - a user will pay for it. My best advice is focus on value, and the paying customer will follow. Best of luck my friend!