(time tracking SaaS) in 2012 to find a better way to manage their freelance staff.

Since then they have been on a long bootstrapped grind to $488k MRR:

How?

This posts explains…



I love the membership club model.

You pay to become a “member”, but only if you pass the very stringent application process.

This gives you the privilege of being able to access special, overpriced areas of the club to spend even more money.

It’s incredible.

And let’s say they ran an experiment where for one day only, the special members club areas were open to everyone… not just the members.

Do you think members or non-members would spend more in the club?

The answer would be members… remember, they have paid for the privilege to be there. Paid users are much more valuable than free users.

This is exactly what happened with
free plan:

Dave’s theory was that
.

Of course, a significant portion of these would drop off or never pay
a cent, but some would upgrade to a paid plan.

However this was not the case, their free plan ended up losing them money.

They found that free users often weren’t the valuable
champions they thought they would be, as free users tend not to have large social media followings or blog audiences.

They were also extremely time-intensive and frustrating to support, placing a burden on
customer success team.

Instead,
switched to a “cheapium” and free trial model, the free forever plan switched to $15 per month.

This image from back in 2015 shows how much revenue they would have lost if they retained their freemium plan:

$7,895 of MRR came from previously free accounts, that was 31% of total MRR at the time.

Yes they lost users, but not as many as they thought and their support costs dropped dramatically.

The increased MRR and reduced support costs gave
more resources to invest back into product and marketing, speeding up growth to $500k MRR.

From
himself:

You shouldn’t worry about driving away users by asking them to pay for what you’ve built. If you’ve built something useful and unique, put a fair price on it and people will pay.

What did we learn?

That it could be time to run a free trial and “cheapium” test instead of your freemium plan.