Should early-stage startups join the cloud market fun?

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The recent one OpenView-Chargebee Report 2022 there was SaaS benchmarks as its focus, but also touched in passing on a topic I was curious about: reverse trials, a pricing model that offers SaaS companies a middle ground between freemium and free trials. Let’s explore. — Anna

Binary choice?

As more SaaS companies adopt product-led growth (PLG), a sales method where consumer conversions are driven by the product itself rather than a sales team, founders are often faced with a pricing model dilemma. If their startup chooses a freemium model, most users will never experience the premium features reserved for paying users. But if the company offers a time-limited free trial, users who don’t become customers at the end of that period may be gone forever.

There are many other pros and cons to freemium and free trials.

As an OpenView partner Kyle Poyar told me, “freemium models tend to drive more acquisitions and more signups for your product, for example, while free trials have fewer signups but have a higher free-to-paid conversion rate.”

As a result, founders often feel they face a binary choice, Pojar said. In an an interviewAirtable head of growth Lauryn Isford told him that these two choices are often thought of as prioritizing user growth (with freemium) or revenue growth (with free trials.)

However, Poyar doesn’t think freemium versus free trials is the only alternative. For companies to “get the best of both worlds,” he and OpenView advocate the reverse trial model exemplified by Airtable. But what are reverse trials and are they for everyone?

Psychology 101

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