I’m just curious if there’s any research on say charging everyone $1 vs charging 1/10 people $10.
If you are doing a free tier, the next level up likely should be at least $5-$10 a month. Or you are overcoming a giant hurdle of getting someone to pay, only for $0.55 after payment processing fees.
* Some sites for sure do the $1-$2 thing, but it seems like not a best practice in general.
Want a healthy online economy of individual consumers that isn't bifurcated between people who might pay because it's related to their one main hobby/business vs the masses who do everything else on Facebook and YouTube? Then let them have a way to give you 20 bucks for what they would have consumed over the next year on your free tier.
Instead of letting me give you 20 bucks one time to try something that looks interesting, which is an easy decision to make, you demand that your customer base divide themselves between casual users who will never leave the forever free tier because your prices won't let them and your billing plan immediately† brings to mind thoughts about the overhead of trying to cancel something that turns out not to be worth the price tag, vs wantrepreneurs who can rationalize a recurring expense at the same price as a year of Amazon Prime because they see it as the cost of doing business since they "know" they're eventually going to win the startup lottery.
† Autopay availability should feel like an easter egg that people can seek out and enable and get a sense of satisfaction from because it makes them feel productive. If you're handling it in a way that makes it a source of anxiety, then you're fucking up. Don't look around and say "everyone else is doing it". If there's a known problem (like "it's really hard converting people into paying customers" is a problem) and everyone else is doing the same thing, that's your signal to not do that thing. (How do so many aspiring capitalists not get this?)
It has the merit of being true, however.
From Zoom to Calendly, from HubSpot to Monday.com, the free tier generates an enormous user base that leads not only to upgrades, but also to a fantastic feedback loop that makes the product stronger and stronger.
In the space where we operate - the democratization of design - the most successful example is by far Canva. It has over 99% of users that are on the free plan, but with 60m users, that 1% is golden, and generates $1b in ARR. Melanie Perkins recently shared some of those numbers and their journey here: https://medium.com/canva/a-note-to-the-canva-community-1d4b0...
So, in the end, it's all about making sure that small % of customers that ARE willing to pay, pay you enough to make it all work. It sounds obvious, but it takes a lot of time to figure it out (we certainly do not have all the answers yet, even after 7 years). But here's the key: among the large amount of free users lies the very audience you need to listen to in order to determine what people are willing to pay for. That discovery process ends up being the game changer.
And your usage is probably going to ingested by Datatrics (their marketing predictive platrform).
Similarly with our embeddable visual builders: you can get started completely free of charge, then move up to a paid plan when you need more. And with this product there are actually many that "need more" from the get-go, so they get in touch with our sales team to make sure that the product is a good fit, do a proof-of-concept at no charge, and then go live.
Some more thoughts on being product-led here, if you are interested, here: https://www.linkedin.com/pulse/product-led-vs-product-focuse...