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For a B2C subscription service, is it recommended to have a free plan? Based on my research, users who sign up free plan suck up a lot of support resources and a number of well known services have deemphasized the free plan by not boldly displaying it on their Pricing & Plans page

On the other hand, free plans do provide an opportunity for users to try out the service before paying for it. If this is the only motive, I guess we can achieve this by either providing a 30 day free period or a 30 day money back guarantee.

Unfortunately, my competitors do offer a free plan and at this point I am not sure which direction to take.

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In my businesses that are B2C, we offer Freemium. Here is what has worked for us.

  1. Serving Ads on free
  2. Limited Support for free customers, (NO PHONE SUPPORT, users forum), we offer technical support, and although we say we dont give phone support, if someone calls they get help. We discourage it, but find that if someone calls we can usually try really hard to convert them.
  3. Limit the features for free. This is very important. If you give away too much then you are out of luck.
  4. We own our own bandwidth. Going to the cloud with a freemium service will drive up your overhead. We dont server CDN content for our free customers. They simply get bandwidth that we buy at a great discount by co-locating our servers. The sites run from the same web-farms, but they do perform a bit slower globally since we Co-lo in los angeles, for our paid subscribers we give them higher quality CDN bandwidth.
  5. We constantly try to convert our freemium users, we have built in coupon codes and other expiring incentives that are often SMSed and Emailed to our Free Users
  6. We are heavy on recurring payments with our affiliate program. The affilaite program is one that we operate which pays 25% based on 3 levels. We find that many of our freemium users eventually become affiliates. I have not looked at the hard numbers, but know that our freemium users add to our paid customer base.

If you can afford to give out a freemium product, my advice is to do it. Its different for B2B products, but consumers are a lot more shy giving out their credit cards then business clients. B2B clients are usually satisfied with a free trial period, but most consumers expect free for online services thanks to Twitter, Gmail, YouTube, and Facebook.

Best of luck on your venture.

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+1 for great tips tried & tested by experience – Susan Jones Jan 8 '11 at 15:50
Thanks susan, but this advice may not apply depending on the product. And some products will likely not have a subscription model. – Frank Jan 8 '11 at 23:38
True. I'm assuming the reader will be able to sort out what applies in their situation and what does not. :) – Susan Jones Jan 11 '11 at 13:25
Good point. . . – Frank Jan 13 '11 at 0:52
up vote 3 down vote

Somewhat difficult to advise without additional info (service type, number of plans, comparison of features w/ competition) - but here is a good paper on the attributes behind the freemium business model.

In addition, there is a good exchange here on freemium or not freemium.

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