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I've got a subscription service with a free tier. Initially, the free tier was far too generous. We've since significantly lowered what that free tier provides. However, we had grandfathered in people already on the free tier.

What are some strategies for moving people from a free to a paid tier, when the two tiers are nearly identical for these users?

I'm looking for some more creative solutions than simply ending the grandfathering of the original free tier (which I imagine we'll have to do eventually).

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What are the grandfathered contractual obligations? You may not be allowed to change the terms. – littleadv Jul 17 '12 at 21:33
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You're looking for ways to encourage these folks to upgrade to the paid plan, is that correct? A bit more information would help. What's the current cost of the paid plan? – Zuly Gonzalez♦ Jul 17 '12 at 23:54
@littleadv, If they don't like the new terms, you can refund their money, which in this case is nothing. – BMitch Jul 18 '12 at 1:45
@BMitch the problem is that if you're obligated to provide the service for free, changing terms may quickly lead to a law suite. So you really need to be careful here and initially draft the terms so that they can later be changed without getting the users' prior consent. – littleadv Jul 18 '12 at 2:54
We're under no legal obligation to continue providing free accounts to those people. – Marc Hughes Aug 2 '12 at 14:54

3 Answers

up vote 2 down vote

It's a bit hard to give you advice without a little more information, but here are some ideas:

  1. Ask your customers. Both those that upgraded to the paid plan, and those that haven't. For those that upgraded, ask them why they decided to upgrade. You may discover some trends. Use that information to find ways to encourage those that haven't upgraded to do so. For those that haven't upgraded, send them an email as well, but this time ask them what would encourage them to upgrade. Is there a particular feature they would pay for? Is it a matter of giving them more of what they already have (for example, more storage)? Any information your customers can give you will be much more powerful that anything we can tell you here.

  2. Add more features. You mention that the two tiers are nearly identical for these grandfathered users. So change that. Add more features to your paid plan that your current grandfathered users don't have.

  3. Add support (or end support). This is kinda a tricky one. If your not currently providing support you could add that as an incentive for your paid plan. But you have to be careful not to create too much additional work for yourself. This might mean strictly email support, or access to a support forum where users can also help each other. If you are currently offering support, you could announce that you are ending support for the free plan.

  4. Limited time discount. Send your users an email with a limited time coupon they can use to get a discount on the paid plan. This is unlikely to work now, since the two plans are so similar. But once you have beefed up your paid plan and made it significantly better from the grandfathered free plan you could use this technique to encourage more upgrades.

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just make sure you don't cripple the free tier so that users won't even bother with it. The first tier should be a free trap for users to invest themselves in it. Then you must entice with with killer features they'll want to have and pay for. Make the upgrade/payment really easy. This must be the friendliest spot in your software/service. So many times I wanted to upgrade to premium but decided not to just because the upgrade process made me lose confidence (e.g. third party 'money' sites, unfriendly/long forms to fill). A good example is the payment page for the software firm 'panic'. Go see – ron M. Jul 18 '12 at 15:06
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There are probably dozens of different strategies, and it all depends on what your application actually does and how much you're charging. I really like the model WhatsApp Messenger implemented. You can use the app for free for a year, and then you have to pay $0.99. Users have enough time to test the aplication, and can pay for it if they like it.

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If you can, I'd offer a significant discount for upgrading to the paid service for your long term (grandfathered) and thus loyal customers.

I'd also ensure you let them know you appreciate their support in the early stages (e.g. being an early adopter) and thus you'd like to reward them with a nice incentive to the paid service.

Keep in mind that there are many users that will sign up for a free service... but have no intention of every paying for the service (esp. if the free version gives them all they need)

Finally, entice them to upgrade by adding really desirable features in the paid version that the free version does not get.

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