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Comment by frederikvs | Hacker News Reader

To me, the big lesson here is : if your company wants to offer a free service, be sure that you can keep offering that for free. Any limitation or restriction you put in place later will result in bad press.

Offer the free service, but put limits in place right from the start. Only this many free repos, only this much free data, etc. Removing a limitation later on is easy to do. Putting a limitation in place is hard, and results in bad press.

It's also fairer to users - they know what to expect, they know the limitations and the rules. They aren't caught by surprise when the rules change on them.

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The problem is that these SaaS companies want their cake and eat it - get a big splash of PR and engagements up front via a great, free offering that sounds too good to be true, and then lock-in and squeeze once the value is realized by the user.

if you do start off with a set of limitations, it's not as big of a splash in initial user engagement, and you also end up with less network effect.

So it does make business sense to offer a bigger free plan and make that splash, despite having to pay for it later in bad press.

What’s more important, bad press or paying users? Sure, not everyone will pay and some users will leave but those that stay might make up for it.

My point is that launching with a free tier and applying limits later has been an effective monetization strategy for many successful startups.

Gitlab might be a special case because of open source projects; providing a service and then asking for money from people that in many cases work for free does feel a bit pointless.

If you make decisions that leads to you making money but causes problems for users then you will get bad press, simple as that. People would rather not use a free service at all instead of migrating and later be forced to migrate to another service again because it got too expensive, so any such strategy is user hostile. It is more user friendly to be upfront with what users needs to pay, of course the initial free is good for growth but still it is user hostile growth.

Sure it’s user hostile; but at this point it’s a “newsletter popup” level of user hostile; most businesses are doing it and you can reasonably stop assuming that you’ll be able to consume for free without distractions.

(Again, I’m not talking about targeting an audience where open source projects are the majority, but about a more general scenario.)

Startups grow by giving users unlimited free access, only to start charging for that access once they've grown big enough. Such users should expect companies to revoke the free access. Such companies should expect bad press for doing so.

> Startups grow by giving users unlimited free access, only to start charging for that access once they've grown big enough.

Yet another example of how we've normalized dishonesty and deception.

What do you suggest instead? Should companies that offer a free plan have legal obligation to continue the service for at least three years?

Also, how is that deception? Most startups never claim that their plans will be forever free and unlimited.

How I see it, free comes with risks. If you want less risk, choose a paid service.

(Obviously the situation is different for open source projects that don’t have money and that are already run by volunteers.)

It's the drug-dealer sales model. "First hit's free, dude!" Which is bullshit.

Either you offer a generous free tier in perpetuity and get all the nice things that come with that, or you don't, and build goodwill some other way.

Are companies obliged to offer goodwill for free?

You know, I think they should, now that you mention it.

This idea that time is money, that everything a company offers should be compensated, is bullshit. The tech industry -- especially startups -- got to where they are today all the goodwill of nerds and early-adopters, and they would constantly ply them with free stuff so that it would plant seeds in their minds that would later blossom to convince the decisionmakers to buy their product.

But it also had the effect of empowering entire generations of future tech workers, by giving them hands-on experience that later translates to useful employees and loyal customers. Microsoft is said to have a similar idea by not cracking down on Windows piracy too hard ... better they're running a pirated copy of Windows than Linux or Mac!

So yes, companies should give their stuff away for free. There is too much focus on dollars and money with how they operate, it's like we forget that they are made of people and that they SERVE other people (their customers). Everything having its price is an extrene sense of entitlement on behalf of management

I appreciate the detailed reply.

Offering free hands-on experience seems like a version of “work for exposure”; even if it can be effective at times for a given company, I’d say on a larger scale it makes the market less healthy.

E.g. it might give unfair advantage to larger companies that can afford to offer free services; smaller businesses might have more trouble with growth and getting recognised.

GitLab team member here. Through the GitLab for Open Source program, open source projects can receive Ultimate features for free. You can learn more about the program here: https://about.gitlab.com/solutions/open-source/join/

I do assume you made this comment in good faith, but it's misleading: this offer is for nonprofits, constituted or otherwise, and not merely for open source projects.

It's important for your company's messaging that you be accurate here.

I'll also take the opportunity to express my disappointment that GitLab has decided that Microsoft's offering should be the home of any open-source project of significance; I think that's bad strategy. But it's not my call.

Thanks for the feedback.

You are correct that in order for projects to be eligible they must not be seeking profit. This is listed as a requirement on the program page: https://about.gitlab.com/solutions/open-source/join/.

You can see many of the open source projects of significance who are part of the program here: https://about.gitlab.com/solutions/open-source/partners/

Your second link lists Gitlab Open Source Partners, which is not the same as Gitlab Open Source Program

> While most partners are also members of the GitLab for Open Source Program, not all are (as some partners are commercial open source entities and therefore ineligible for the program).

Source: https://about.gitlab.com/handbook/marketing/community-relati...

Thanks, you're right. I should have wrote:

You can see many of the open source projects of significance who are using GitLab here: https://about.gitlab.com/solutions/open-source/partners/

> Through the GitLab for Open Source program, open source projects

Will a individual developer be able to create a repo for a small FLOSS project under these terms? I don't see the option there.

And before somebody says that a small project will fit a free tier, remember that this entire discussion was born from the fact that free tiers can be removed 5 minutes from now if Gitlab wants to.

If an individual developer's project meets the program requirements, it is eligible.

The requirements are:

- use an OSI-approved license

- not seeking profit

- be publicly visible

There are some other implicit requirements like:

> Program members must renew their memberships annually.

> Upon acceptance to the GitLab for Open Source Program, all program members are subject to the GitLab for Open Source Program Agreement.

Source: https://about.gitlab.com/handbook/marketing/community-relati...

"My point is that launching with a free tier and applying limits later has been an effective monetization strategy for many successful startups."

That's usually called bait and switch.

It's not just limited to free services. Netflix is pulling the same stunt by imposing "added household" fees on top of existing concurrent streaming limits.

And they are destroying their business in the process. Trust is hard to earn, but really easy to lose.

1: https://finance.yahoo.com/quote/NFLX/

2: https://time.com/6198354/netflix-subscribers-loss-second-qua... (If you have JavaScript disabled remove position: fixed from the body to read, or https://archive.ph/tGzqK)

3: https://www.bbc.com/news/business-62226912

The thing is that offering the free thing to begin with is often essential to getting market share, if they followed your advice, they might not have as good chance of success.

In the particular case, Gitlab clearly offered the free repos to compete with Github. They had to get mindshare and marketshare to then get paying customers. If they had not offered free repos at the start on the same (or better) terms than github, would they have ended up with as many paying customers as they did?

So the business plan (whether intentional or not, and I don't know) for many of these companies is to offer a free service in order to get mindshare and marketshare, then once you have a sustainable amount of attention and paying customers, eliminate or reduce that free service. (Or, in other cases, change your licensing from open source to something else).

To me, it seems both wholly expected, and wholly justifiable, for users to find this annoying and manipulative, and complain about it. Of course, users could avoid the free service in the first place predicting this is coming, sure, hypothetically. And companies could, hypothetically, avoid following this playbook if they don't want to upset users...

To add on..

An alternative model is to keep offering what you promised in the free tier. and make new feature development paid only.

The more important thing is to be fair to users when you are moving the goalposts. Grandfathered pricing and long notice periods for instance.

I can accept that services change, but it’s not reasonable to create an unplanned panic for customers needing to migrate infrastructure or pay up under time duress.

If I opened a pizza shop and gave free slices away to promote it - people would not expect to get free pizza for life. I have no idea why people act so different on the internet.

If you marketed yourself as the Pizza place that gives slices away for free then people would expect that. If they showed up for their free slice and you said, sorry, now they cost money, you can be sure they'd be angry. To extend your analogy, imagine they had taken a taxi to your pizza place to take advantage of your offer only to find they could no longer afford your pizza. Now they are forced to take another taxi to get to a different pizza place or go home and cook their own and they are mad as hell.

Yeah but what if the pizza place in question said in March, "While you can get a free slice of pizza now, in a few months[1] that won't be the case," and then provided a clear date for when that will happen?

I'd say anybody who is still showing up expecting free pizza has made a mistake.

[1] https://about.gitlab.com/blog/2022/03/24/efficient-free-tier...

If you give away pizza for free for 3 months, and then stop, even if you announced ahead of time that you'd do that, people will still be upset when they show up for their free pizza after that 3 months.

If you give away free pizza for a week, it won't be a big deal. After a certain amount of time, people expect it and will be quite upset when it ends, no matter how you try to prepare them.

Of course, others are more reasonable. But there are far too many who will simply expect it forever.

Your analogy doesn't work on that level. Going to get pizza is a decision which requires little planning and has no long term consequences, which is totally not the case with choosing a service provider like Gitlab. Metaphorically, customers who built their infrastructure on Gitlab while it was free are in the cab on their way for all those months of time because they have invested time and money in your offer and now have to invest more to replace it. Hence they are angry. There's nothing particularly entitled about that beyond the base entitlement that we all generally feel for the things we expect.

That's the analogy of the person I responded to. I just extended it, but I think you're subverting it. Those customers who built their infra on GitLab while it was free aren't in the cab on their way, they've been to the joint over and over again. And again, they had at least a full quarter to find another free service to build their infrastructure on.

I'm going to put this on its own line just to highlight it:

[...] find another free service to build their infrastructure on.

W-w-who actually thinks that's a good idea to begin with?

https://www.npr.org/sections/money/2012/07/13/156737801/the-...

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