This post is by Jason Lemkin from SaaStr
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Aaron Levie and Karen Appelton, his ex-head of partnerships came to the 2018 SaaStrAnnual.com to talk partnerships and one point on “free” deeply resonated with me. Aaron said he wished his API could be 100% free for everyone, for everything. He said he lamented that the reality was that wasn’t practical for Box’s current business — but he wished it could be. What did he mean? What he meant was he knew that to win, to go big, to be ubiquitous … you want everyone and every partner using your web service. Everyone. That’s the best way for your brand to win, at least if you have a broad-based product like Box (or Adobe Sign or Slack or Zoom). To get it into the hands of everyone. To deploy it. To integrate it. To tell their friends. To recommend . And yet for most of you, making a big portion of your product free will create tensions:
- The sales team often hates free. Best case, it gums up their sales process and confuses it. How do you sell a $250,000 edition when folks can also use the Free one? It also can create a ton of leads that sales can’t close.
- The marketing team often wants to limit free. If marketing has a revenue goal from self-service (and hopefully they do), they’ll often want to increase the “choke”. I.e., limit how much the free product can be used, or how long. Often to the point of really crippling the long-term benefits of a free edition. Everything is about “free-to-paid conversions” in marketing.
- The support team almost always hates free. They pay nothing but overwhelm your support channels.
- The ops team sees free just as a cost center. Unless you are a 100% freemium play, if free is just a segment, the “business folks” and ops folks will just see them as a cost center, to be managed down.
- Your investors might not really get “free”. The pressure to hit the plan will often have them suggesting to you to figure out how to monetize those free users … now.