To generate rapid traction for their products, many SAAS providers offer a Freemium plan, which is free access to a truncated version of their full blown software.<\/p>\n
By doing so, they expect users to sign up for their software without any risk, play around with it for a month or two, and upgrade to the paid version soon thereafter.<\/p>\n
Alas, it rarely works like this in the real world. In fact, I call it the modern day version of the old misconception “Build and they will come\u201d.<\/p>\n
I\u2019ve been using many products for years without paying for them e.g. CamScanner<\/a>, Color Detector<\/a>, Hootsuite<\/a>, IrfanView<\/a>, OneTab<\/a>, Pixel Ruler<\/a>, WordPress<\/a>, etc. I’ve heard of people who stretch trial periods of software to eternity by signing up for a new trial version from a different email address when the previous trial version reaches its expiration date.<\/p>\n And it’s not just my personal experience.<\/p>\n According to anecdotal evidence, paid users comprise only 5% of the customer base of most SAAS vendors, with the remaining 95% staying on the freeemium version forever.<\/p>\n It’s not sustainable for most companies to support 100% of their user base with revenues from only 5% of it.<\/p>\n Therefore SAAS vendors are constantly on the look out for ways to convert freemium to premium i.e. upgrade their freemium users to paying customers. Success or failure in this endeavor – more than anything else – separates SAAS unicorns from the deadpool.<\/p>\n FlightRadarPro is the poster child for freemium model: I went from the free app to its paid version in < 10 minutes.<\/p>\n — Ketharaman Swaminathan (@s_ketharaman) September 10, 2013<\/a><\/p><\/blockquote>\n\n