Simon Sewart wrote this on 25 Jan 2018
Sucking of the teeth and a slight shake of the head. I was speed-mentoring with SetSquared.
50% liked my pitch, 25% loved it, 25% didn’t have a clue why I had built EvantoDesk [figures not exact by the way].
Yet, unequivocally, 100% hated our Free Plan. So, that was 100% sucking lemons and shaking heads. Comments such as:
“Only about 5% of customers on a freemium model upgrade to a paid plan”.
“Do you have the resources to support customers for free?”
The potential cost of a highly popular Free Plan!
They were of course all valid points. And, who was I, a veteran of just 1 start-up, to disagree? These guys were highly successful entrepreneurs and mentors with SetSquared (officially ranked the world’s Top Business incubator).
Yet, I did disagree. And, 6 months on, I’m still glad I did.
The reasons are outlined below.
Increase Customer Base Quickly
In those 6 months, thanks in large to an amazing review by Capterra, we drove our customer base to over 200 customers without spending a penny on marketing. Most of these customers utilised our Free Plan.
They picked up small bugs that had been missed from our extensive beta testing. This was always going to happen - bugs will hide until there is a big enough volume of users, using an app in their own unique way, to unearth all the issues.
Every email sent by these companies, had at their footer:
A service from Acme Mountain Bikes powered by evantodesk.com
Using Google Analytics we were able to monitor exactly how many clicks these links generated. The average clicks over a 6 month period was 1.18%. That’s free driven traffic and free advertising. What we should have then done is monitor how many of these led to conversions but given that we have about a 10% conversion rate on site visitors, it would probably be close to that.
The model of EvantoDesk is such that, after perhaps some initial help, customers just get on with it and we don’t hear from them too often. As such, supporting 200 customers for free was entirely possible for us.
How many free customers can you support calculation:
To work out how many customers you can support for free, work out how many minutes (m) you need to spend on average each week to support 1 customer. Divide these minutes into the available minutes you can spend for free on support each week (e.g. 37 hours x 60 = n).
So n/m = number of customers you can support.
Why We Dropped Our Free Plan
The plan was always to cap the number of Free Plan customers at 200. Mainly for the reasons described by the mentors at SetSquared i.e. that as a boot-strapped company, we didn’t have the resources to support more than 200 business for free.
So, as from now, we are no longer offering a Free Plan. Of course, those already on the Free Plan, can stay on it for as long as they like and we’ll continue to give them outstanding customer service. After all, they’ve been instrumental in helping us build the EvantoDesk brand.
This post by ChargeBee is fantastic if you want a more detailed, technical analysis of whether or not offering a Free Plan is a good idea for you.
Careful consideration has to be taken when considering whether or not to offer a Free Plan for your business. If done right, it can help take your business to the next level. If done wrong, it can sink you like a stone.
So, always consider, how many customers you can support with the resources you have (use our calculation above).
Always consider pros and cons unique to your business. For us, we include a link to EvantoDesk on each email our Free Plan customers send.
Free plans are certainly not for every business so always consider the uniqueness of your business and then perhaps, like us, you can leverage a Free Plan is such a way that it can benefit and grow your company.
About the author: Simon Sewart is the CEO of his 2nd startup EvantoDesk.com (simple help desk software for small and medium sized businesses).