TT #004: Need For Free, Want For A Fee
This week I thought I would talk about something I’m contemplating, PLG.
I’m thinking about how I could put in place something in one of my businesses. It would mean a change to the business model and involve some work. Would it open up the product to more users though?
It’s a phrase that a friend said to me on our weekly mastermind, which he’s seen on social media somewhere.
“Give them what they need for free. Give them what they want for a fee”
What an amazing phrase.
We both run software products and have others either launched or in the pipeline. So it might not be applicable to every business. Or maybe it could, it’s just a case of finding that balance.
This type of business model is known as “Product Led Growth”, PLG for short.
There are so many software businesses, not just in silicon valley, but around the world using PLG. The main idea is to build something so good that it “sells itself”. You get more customers from word of mouth because they become “raving fans”.
Many businesses give a lot of their service away for free, putting more advanced features behind a paywall.
Here are some real-world examples
“Need For Free” PLG In Action
You have probably used one or two of these products, even all of them if you like trying new tech.
Zoom
If you want to talk to your family, who live on the other side of the world, “face to face”. Zoom gives you this ability for free, as long as you don’t want to speak longer than 30/40 minutes. All you need is a decent internet connection and a device.
That’s access to an amazing infrastructure and network for free.
Evernote
This was one of my favorite apps, and it is a great way to record everything you want or need to keep. You can create your own notes, embed things, and even clip website pages for future reference.
It’s such an amazing way to “brain dump” everything, and it gets backed up for you at no extra cost.
Descript
I’ve had my own podcast up and running for a few years now. At the start, it was a struggle to record, edit and publish the podcast. Getting a transcription was even harder and they always had a lot of errors, which I needed to correct.
Descript has a desktop app that has solved all these issues and it’s free to download and install.
“Want For A Fee” PLG In Action
So how do these products make money? This is where the “wants” come in.
It’s a fine balance to work out what to charge for and from what starting point.
Here is how these products have thought about it.
Zoom
What to have a “face to face” that last longer than 30/40 minutes, then you need to subscribe to a monthly plan.
There are other benefits, like being able to record the meeting directly to the cloud. Zoom figured out that limiting the time you could chat for free is the best way to go from free to fee.
Evernote
If you want to store information for a later date, and only want to use your PC then Evernote’s free is great. Want to add notes using your phone, your laptop, and your tablet. Then you will need to pay for the privilege.
Also, Evernote limits the amount of “web clips” you can do each month if you’re on their free plan. Want to save half of the internet? Then you will have to upgrade to a paid plan.
Descript
One thing the Descript has found is that a lot of their free users only need 3 hours of transcriptions. Need more than that and you have to upgrade, their basic plan gives you 10 hours of transcriptions a month.
Also, if you record videos using Descripts free plan, they will place a watermark on the video. To remove this, you will need to upgrade to a paid plan.
Implementing PLG
My main software product Elementary Analytics currently doesn’t follow this model.
I offer access to the full product, absolutely everything, free for 14 days. Once the 14 days is over you then have to subscribe to one of our paid plans depending on what features you want or need.
Working out which business model to go with has been a struggle and involved a lot of back and forth.
Currently, I’m resisting switching over to a PLG model. My gut feeling is I need more users on the product first, get their feedback and go from there.
If you’re starting out building a software product. I would recommend looking into the PLG model. Especially if you’re going to be in the B2C space.
It could help you move forward very fast. Growing your user base a lot quicker than other software business models.
