The classic debate in SaaS Product-Led Growth Monetization.

There are pros and cons of each strategy, however, what I fail to see written most of the time is how free trial and freemium cannot bring success without considering the monetization strategy (usage vs feature-based pricing) and the UX of the monetization motion.

Let's break these down.

Free trial is when a SaaS company offers a user their product's premium features, usage, and services for free for a finite amount of time. Typically 14-30 days. After the time window, the user reverts to a free plan with limited features, usages, and services or can upgrade/stay on the paid plan.

Freemium is when a SaaS company offers full rights to most of the product features and services for as long as you want. Typically, there will be a paid plan in tiers where a user can upgrade to a premium plan where they can access an increased amount of services.

For a real breakdown of what's best, check out this article by Elena Verna (Reforge).

However, I want to add a layer into this conversation: How your PLG - Monetization (pricing) strategy should influence whether you go usage-based vs feature-based.

Many leaders in SaaS are talking about how the future of PLG is usage-based monetization.

Most of the usage-based PLG SaaS companies like Miro, Twillio, Netlify, etc have freemium self serve strategies, as opposed to free trial strategies. However, I am noticing something unique start to come out of the Product Led Monetization strategies. Free trial is feature-based, not usage-based dominant. Why?

Let's look at two examples.

Calendly and Crunchbase both have strong Product-Led Growth monetization models built on feature-based pricing through free trial motions.

The Free Trial motion is incredibly important to their monetization model, however, each of these company's choices of UX is polar opposites.

Crunchbase

1. User signs up for free

2. User wants to explore a list of companies

3. User hits paywall

4. User asks to upgrade to Pro on Free Trial

5. User wants to download/export a list of companies

6. User hits paywall - must be paying subscription to export (Crunchbase found out that users REALLY want this feature)

7. User pays annually (Crunchbase also knows this value is very high which is why they only allow annual payment, not monthly)

8. Notice (below) how clear their UX/UI is around exactly how much you are paying and when.

Calendly

1. User signs up for freemium tier

2. User starts using features, creating multiple events, and connecting multiple email connections (core use cases)

3. User receives an email informing that they have been on the Teams Trial (free trial of paid plan)

4. User upgrades to Teams (paid) Tier

5. Notice (below) that you don't even know that you are on a Teams Trial until you go to your billing or receive your 7-day email notifying your revoked subscription trial.

The major difference in both of these UX is that Crunchbase is very clear about what features they put behind the paywall and the free trial plan that you are on.

Calendly secretly puts you on a paid plan trial even though you select the freemium plan. Calendly is a Free Trial SaaS company disguised as Freemium.

Even though usage-based monetization typically has compounded revenue effects on a company's bottom line, these SaaS companies are typically more collaborative and require large team inputs to generate increasing value. With feature dominant players like Calendly and Crunchbase, there is a saturation point in which adding more team players tends to plateau on the value-growth curve. See below:

There are exponential value effects that come from usage-based value strategies as the team size grows, however, the value starts off smaller than feature-based value at smaller team sizes.

TLDR;

If someone asks whether free trial or freemium is better, respond with: "What kind of monetization strategy are you leading with?"

Don't chase after the money. Understand the user psychology of your product, then develop the growth strategy, and then experiment with pricing models.

The monetization strategy of feature vs usage-based pricing should be a major variable in deciding whether to go free trial or freemium.

PLG Monetization that = usage-based pricing = freemium self serve strategy

• Dropbox, Airtable, Fastly, Twillio, Netlify, Miro, etc

PLG Monetization that = feature-based ricing = free trial self serve strategy

• Atlassian, Docusign, Drift, Elastic, Calendly, Crunchbase, etc

(of course, this is not a one size fits all and many PLG companies actually have a combination of both)

Thanks for reading! :)

I am trying something fun. I am giving away 4 hours of my time for a Growth Advising consultation. If you’re interesting, please support my work by collecting this post as an NFT. The first 5 people to do so will get 4 extra hours for free! (8 total).

drewteller.nft

LinkedIn

drewteller.com

Yoga is the love far above, deeply displaced of all things to rid me of.

I have to let you go, But it is not forever

I dream about being in your dreams, As my thoughtfulness thinks more than it seems

You are a little bit further than far away, but I’m not scared because my heart has you closely close

I have to close my eyes now, But it is not forever

When they open heavy and blurry, Your face will be there for lightness and clarity

I wonder about forever, A word that is never changes, yet forever changes

The change I wish to see is one that is old and average, Yet spontaneous and joyful

It is a forever life-changing love that grows never apart, Yet always together

I have to let you go now, But it is not forever.

You see I get asked a lot, “What’s your type?”

You see I don’t have a type So what’s all the hype?

You see She doesn't just fall into a basket She cannot be defined by a certain asset

You see The love I look for runs much deeper than just a type The love is not a fruit, it’s not judged by how ripe It’s not judged by her body or her money But what if she is funny?

You see Instead of looking and searching I notice Moments that resemble a flower’s lotus

You see When I see her strive for perfection I begin to question What pain is being sectioned Covering up, revealing her own self-reflection Of some internal rejection

You see When she shows her imperfection I am curious to see more of This reflection If she shows her scars and pain I see the love in vulnerability that there is to gain I see the brave soul that beckons the blood in my vein

You see When I See Her There is no blur A perfect complexion Of her true self-reflection Slowly, I begin to hone in As I look for love in this subtle moment

You see It’s her willingness to be seen without knowing she will be seen It’s her courage to be heard without knowing she will be heard It’s her authenticity to be understood without knowing she will be understood

You see It’s her bravery That I see

You see It’s in these moments I see resilience The power within a painful experience Because now I will get curious Even super serious Now She is mysterious I’m excited Maybe a little delirious

You see Resilience It’s this power that reveals her strength The capacity to fight for self-love at length This is not the type of love I rank It’s the love I look for that I’ll take to the bank This is love A slate that’s truly blank

You see I don’t have a type.