How to Move your SaaS Users from Freemium to Premium

By January 15, 2020 November 8th, 2021 No Comments

There are no free lunches in the world. It also holds true for freemium plans for SaaS. As a business, you need to come to terms with that fact that there is a sound reason to roll out a freemium version of your SaaS product. If you are rolling out a freemium plan it’s majorly for getting you prospective audience acquainted with your product. Brands like Dropbox, Grammarly, Slack, Figma, Evernote, Mailchimp and Zoom, just to name a few, have used freemium versions to their advantage. 

But, how do you push your user from freemium to premium? How do you design a premium version that pushes your freemium users to it? It can be a real challenge. How on earth do you convince them to give up something that is free for something that is paid?

So, let’s get to the bottom of it. 

Why Offer Freemium in the First Place?

Any SaaS freemium product is floated for creating what is often called the ‘endowment effect.’ It means that a user is bound to value something because they already own a part of it. Once they have downloaded your freemium product, in a sense, partial commitment has been made. It creates experiential value for the customer. It also creates the need for owning more power. 

As for you, as a SaaS business, it will give you insight into your market through usage tracking how freemium users interact with the software. This can give you a clear view of what features to include in freemium and what to keep back for premium. Apart from that, freemium also does the branding for you. Users get to try it before they buy it. 

Understand that Not All Users will Convert

That is a given and also a good thing. The goal of freemium isn’t too convert 100% users. A free product attracts all sorts of users including those who hold the promise of conversion. There are always the ones who will never convert. And when you track the usage metrics, you will know the one who won’t convert. So, take your attention off them. 

For those who may buy, you have already given them the best way to experience your SaaS product. You have also provided them with a funnel that has no obstacles to purchasing the premium service. The touchpoints become fewer, offering convenience to the customer. 

If you nail what to include in your freemium, you will also get to know how many will convert to paying customers in the long run. 

Figure out Who will Convert by Identifying Product Qualified Leads

Pay attention to lifecycle stages of the users. Just like Marketing Qualified Leads and Sales Qualified Leads in services, Product Qualified Leads matter in product-led growth.

The primary criterion for a PQL is freemium usage level, beside, to an extent, personas, company as well as the product. A PQL is identified when a user has been using freemium to the extent that they’re on the brink of requiring additional features/limits/storage (whatever your premium version offers). 

In short, they are about the exhaust the value for freemium. That’s when you prompt the user. Odds are that if they can derive no more value, they will upgrade on their own, in which case, yo do not need additional expense of a large sales team. But a nudge is never a bad idea. But never turn that nudge into a shove.  

Decide upon the Core Makeup of your Freemium Version

The primary aim of the freemium model is not conversion; it is attracting new users. Is your freemium version able to do that? 

There is always a risk of offering too little or too much. The truth is that the optimal balance can be found by either taking a cue from the competitors, or re-tweaking your own versions till you find the right balance of traffic and subsequent conversion. 

Users expect more as a rule of thumb, but the balance is for you to find. Only by limiting the freemium version at the right point can you derive conversions. 

Create Nudge Points

You’d agree if I say that warnings are better than surprises. At times, instead of throwing a surprise at the user by restricting a certain action meant to be included in premium as and when the user comes there, it is better to warn beforehand. That is what is called a subtle nudge. 

Place subtle reminders like, “Do you know that ABC premium allows you to share files too?” Placing this at the end of the completion of another lesser action can be a good opportunity to nudge. 

This way, you remind the user without ever interrupting the workflow. Some users may get interested and explore the upgrade option and some may not. But, psychology has it that subtle repetition tends to work more often than not. 

Introducing Added Features with Premium

Goodies can be alluring. At times, a user won’t know about the better features of the premium versions if they are not told about it. Creating the elephant in the room works rather better than ignorance any day. 

Some users may never upgrade until an offer is served. So, serve it in a well garnished dish. Try promoting these added features within the context as much as possible. That helps them understand the features better. 

Making the Upgrade Easy

A long and complicated upgrade process is the last thing a user needs for moving from a free to a paid version. It is likely to dissuade them for the upgrade. So, make it as easy as can be.

Since they are already a registered user, you have almost all the data you need. So, ask for minimum possible information from the user. That requires minimum effort from their end. 

Even if you do not have enough information, prioritize the transition. Keep the steps like setting up of profile for later, something that the user can do once they’ve upgraded. 

In most cases SaaS businesses collect payment details when users register for the freemium model. And it works well because minimal hassle occurs while paying. 

Remember that freemium is never only for the greater good. It is a SaaS business’ gateway to doing great business. Take it seriously if you wish to move your users from freemium to premium. 

Antoine Woods

Antoine Woods

Antoine is the founder and Managing Partner at Vertical404. He is a strong advocate of entrepreneurship and has spent his career working with tech startups as an entrepreneur, developer, operator, and investor.