Why Free Plans Don’t Work • Hacker News Board

Re: Why Free Plans Don’t Work

#61

Post by jdc » Wed, Aug 18, 2010, 4:17 PM UTC

steveklabnik wrote: post #48

startuprules wrote: post #45

Earlier quoted context omitted.

World of Warcraft dominates the MMORPG market. Why? they created the best damn product. Go free to get lots of broke users if you want to help scammers serve ads to those users.

WoW also offers a lot of free months to players. Sign up a friend, both of you get free months. I almost said "and WoW isn't the best damn product," but that depends on your definition of 'best.' It almost mirrors the Mac/Windows thing. Connoisseurs tend to scoff their noses, yet they just keep on selling... WoW is a mediocre product executed _perfectly_.

http://www.metacritic.com/search/game/world+of+warcraft/resu...

Define mediocre.

Re: Why Free Plans Don’t Work

#62

Post by revorad » Wed, Aug 18, 2010, 4:24 PM UTC

daleharvey wrote: post #60

revorad wrote: post #57

Earlier quoted context omitted.

What consumer OS on affordable computers (that leaves Macs out) was/is better than Windows? It took the court system to slow them down. That was not for their dominant desktop OS, it was for using their monopoly to push IE and server products. You can call out Microsoft on dodgy anti-competitive behaviour in some respects, but you cannot take away credit for building the solid product that is Windows. Heck, even now…

I much much much prefer desktop linux, I would hesitate to call windows decent, let alone by far the best. Yet I have still found it as much as impossible to buy a computer without windows preinstalled.

I prefer and use linux too, but the typical HN user doesn't represent the consumer market.

Re: Why Free Plans Don’t Work

#63

Post by nhebb » Wed, Aug 18, 2010, 4:44 PM UTC

noverloop wrote: post #8

I think you should use a free plan if actively using the 'free' plan will eventually force the user to go to a paid plan. e.g. dropbox. If you just give your core product away for free then users will only switch if they need the extra features of the paid plan. You can still use 'free' for marketing, because total conversion rates with a free plan will probably be higher, just don't expect these 'free' customers to…

The problem with dropbox is that they don't have a client for automating backups. That means everything I store there has been manually dragged into the dropbox folder (see NB). It would take me a long time before the number of files I needed to share online exceeded their free limit.

NB: Truth be told, I run batch files via task scheduler for backing up certain folder to dropbox, but I doubt the typical consumer does.

Re: Why Free Plans Don’t Work

#64

Post by geuis » Wed, Aug 18, 2010, 4:49 PM UTC

I just finished FREE by Chris Anderson.

It's a free download at Audible.com. I highly recommend that people listen to the book as it's only about 6 hours long.

Re: Why Free Plans Don’t Work

#65

Post by aycangulez » Wed, Aug 18, 2010, 4:52 PM UTC

A free plan is often a replacement for advertising spending. It gets you users who wouldn't otherwise consider using your product, and you hope that they would tell their friends about it, and some of those friends would eventually pay.

Here is an extreme example: If I remember it correctly, MySQL's conversion rate was quoted as about 1 in 1000. If they didn't distribute the entire product for free, they would have much less market penetration, but certainly earned much more. Had they chosen that route, they wouldn't be able to sell the company for a cool billion.

Nothing in life is free. If you want a lot of users, and don't have the advertising budget for it, you give some or all of your product away for free.

Re: Why Free Plans Don’t Work

#66

Post by neild » Wed, Aug 18, 2010, 4:54 PM UTC

revorad wrote: post #57

damoncali wrote: post #54

Earlier quoted context omitted.

I can see iPod and Adsense, but Windows? Windows won for very, very different reasons. When Windows first appeared, it was far from the best product on the market. It won because it was already everywhere (because of DOS). Microsoft practically invented the "give it away to ensure market dominance" game (Ok, slight hyperbole there). It took the court system to slow them down.

What consumer OS on affordable computers (that leaves Macs out) was/is better than Windows? It took the court system to slow them down. That was not for their dominant desktop OS, it was for using their monopoly to push IE and server products. You can call out Microsoft on dodgy anti-competitive behaviour in some respects, but you cannot take away credit for building the solid product that is Windows. Heck, even now…

OS/2.

Re: Why Free Plans Don’t Work

#67

Post by chc » Wed, Aug 18, 2010, 4:55 PM UTC

dagw wrote: post #30

Perhaps a good balance is, instead of free, charge a small one time setup fee. pinboard.in for example does this and it seems to work really well. They offer a premium version with a monthly fee and a "free" version, which cost something like $5 or $6 to set up. To me, the difference between free and a one time $5 fee was minimal, but to the people running the site difference in revenue is probably pretty huge.

That's worse IMO. Maybe the $6 is minimal for you, but it's not in the average case. Studies have shown that there is an enormous difference between "free" and "cheap" in people's minds. The difference between free and $1 is bigger than the difference between $1 and $10 in terms of customer resistance. The point of a free product is to eliminate barriers to entry. Most people are not that dedicated, and even the smallest snag in the conversion process can shoot them out of the funnel. Charging a small setup fee combines the worst aspect of pay (much harder to gain users) with the worst aspect of free (anemic revenue).

Re: Why Free Plans Don’t Work

#68

Post by VBprogrammer » Wed, Aug 18, 2010, 4:58 PM UTC

I feel this really should have been titled "Why My Free Plan Didn’t Work." Since free plans have and will continue to work for some people.

I don't know about you but I doubt GitHub would have taken off had it been exclusively pay-ware. Even if it did gain some traction someone would have made a free with upgrade option version of it.

Re: Why Free Plans Don’t Work

#69

Post by revorad » Wed, Aug 18, 2010, 5:01 PM UTC

scrrr wrote: post #7

eldimo wrote: post #6

Earlier quoted context omitted.

That's why you offer free trials. :)

So the real advice is: Offer free accounts and then get rid of them.

I didn't see that being advised anywhere in the article. I think the author is implicitly recommending limited free trials, which make perfect business sense.

Re: Why Free Plans Don’t Work

#70

Post by samatman » Wed, Aug 18, 2010, 5:11 PM UTC

revorad wrote: post #57

damoncali wrote: post #54

Earlier quoted context omitted.

I can see iPod and Adsense, but Windows? Windows won for very, very different reasons. When Windows first appeared, it was far from the best product on the market. It won because it was already everywhere (because of DOS). Microsoft practically invented the "give it away to ensure market dominance" game (Ok, slight hyperbole there). It took the court system to slow them down.

What consumer OS on affordable computers (that leaves Macs out) was/is better than Windows? It took the court system to slow them down. That was not for their dominant desktop OS, it was for using their monopoly to push IE and server products. You can call out Microsoft on dodgy anti-competitive behaviour in some respects, but you cannot take away credit for building the solid product that is Windows. Heck, even now…

OS/2 leaps to mind...