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How 'free' is free?

greg
By greg
on April 19, 2017

In the fast-growing cloud-based software industry, the ability for a firm to make a sale relies almost exclusively on a combination of strong online marketing presence and coherence of what the product is and does for the potential client base. In a field now containing several competing products, all offering very similar benefits, the whole concept of a USP is becoming increasingly unclear – what does X do for me that Y doesn't? Why should I move across to Clinked when I've been a faithful Sharepoint evangelist for the past decade? Enter, the free (or perhaps 'not-so-free') trial.

The benefits of signing up for a free trial have long been clear to all, and this is no different in the case of the collaborative software industry. However, the various approaches to the free trial offering are somewhat different from each other. While some offer a limited (usually 30-day) free period after which the account is either terminated or upgraded to a paid version, others offer an unlimited free version of their software incorporating a reduced-capacity form of their product. For those firms offering free trials, these trials correspond to the exact package under consideration by the potential buyer so that the full experience can be replicated.

However, an obvious by-product of heavy subscriptions to free versions is reduced revenue. It only requires a brief probe into the cloud software blogging community to quickly discover that many companies are now considering 'hiding' their free offering on their website, or eliminating it completely. For start-up enterprises in particular, offering a free product attracting 5- or 6-figure subscription tallies may seem a useful way of getting noticed; but the problem arises when, out of those 50,000 perfectly satisfied free users, only 250 ever decide to upgrade to any of the paid versions. While larger, more established firms can comfortably offer such schemes as their funding is usually covered exclusively by advertising, the hope for start-ups is that a permanent free version will educate deliberating customers as to the superiority of their product.

Collaborative project management software firms are not Facebook; advertising revenue provides a relatively tiny proportion of overall turnover, and can therefore not be counted on to provide any significant financial contribution to the business. So for firms like Clinked, a fine line needs to be drawn between reeling the client in with no obligation on their part and ensuring that a sale is achieved. Many such companies have reported that, after hiding the no-cost option on their website so that it was visible to fewer people, they managed to increase their revenue by figures as staggering as 800%; similar successes have been reported by other enterprises after downgrading the longevity of their free product to a simple 30-day trial.

A strategy incorporating an infinite free-use product, then, is one that can only really be tenable for firms that have already attracted a great deal of corporate interest and are subject to a number of lucrative sponsorship agreements, which in turn serve to attract an even wider client base. Start-ups, however, fall foul of this principle by providing a package that gives many people exactly what they need in the free version, offering little incentive to start shelling out for improvements they don't necessarily need. Free packages that are not time-restricted must remain the 'Mecca' of the project management software world, a milestone made reachable only by success itself, and not as a pre-condition to it.

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