How can this help you? Non-Ordinal Names and Value Metrics
1. Skip ordinal names for your free tier
Instead of using cliche ordinal names like "free", "starter", "basic", or "lite", use a real name. Not creatively inclined? Just grab a thesaurus and get cracking. At the very least name the tier after the customer persona using the product. If the free plan is for a single person with the hope you’ll land and expand into the team, then name the tier “solo.” If it’s for small businesses, you’re also hoping to grow with, then name it the “small business plan.” I’m not a creative genius, so I’m sure there are better examples out there.
Just don’t kill your value, conversion rate, and revenue by pricing improperly.
2. Align your tiers along your value metric
A foundational principle of pricing and packaging is that you need to charge your customer for the value you’re providing them. As that value increases, you should charge more. Wistia is a phenomenal example. As you get more bandwidth and upload more videos (get more value from the product), you pay more.
If you don’t have a finely tuned throttle or proper feature differentiation between your free plan and that first tier, then you can’t move your customers up along your value. You’re just giving it away. This is especially scary in the enterprise space where the difference between a free plan and the first premium one can be from $500/month all the way to $1000s per month. As such, make sure that free plan, no matter the tier moves that customer “up the river” efficiently.
Freemium offers are only the silver bullet to a business when you’ve figured out a good portion of the big aspects of your business: customer, marketing flow, user metrics, etc. If you’re taking the free plunge or starting off with it from day one, make sure to start small. You can always add more features or increase the throttle, but it’s a heck of a lot harder to take things away. After all, if you’re not moving those customers up into greater profitability, then you’re just running a really expensive, developer ridden tech charity, rather than a growing business.
To learn more, check out our Pricing Strategy ebook, or learn more about our price optimization software and solutions. We're here to help!