Making the Case for a Free Tier

The debate between freemium, free trials, and paid-only SaaS models is very real, and still unsettled. Rather than take a hard line position one way or the other, we wanted to better understand the concepts that fuel this decision.

The reality is that every business is different and what works for one simply may not work for another. Each industry, each founding team, and each product have unique qualities that can alter the validity of a “freemium” model. We’re going to take this opportunity to talk about why we launched our own free tier for Parakeet, and the unique qualities of our market that led us to the decision.

We rolled out our first early beta in January of 2017 to a small group of 10 users. We gained a lot even from such a small trial, and that feedback was pushed directly back into the product we’re building today. Once we felt like we had enough to start selling customers, we started hitting the phones and setting up demos. We were of course trying to learn from every call we had, but we had another goal as well: we wanted to sell our product. Once we actually started selling, we noticed new feedback patterns emerge that we hadn’t heard previously. Some prospects felt concerned about porting their phone number, others felt too deeply involved with their current solution, and a smaller set simply didn’t have the bandwidth to devote any time to dealing with the issue at all.

As we took the time to review the conversations we had and analyze our notes, we saw an opportunity to do something valuable for our customers and our business: give away our product for free. While there were a lot of factors that led us to this conclusion, we’ve distilled our reasons down into a few key points that are driving this powerful move for us.

We want to help startups

We’re a startup ourselves, and we care about other startups. When you’re a small company trying to plant your feet in the market, you look for every avenue you can exploit to differentiate yourself from your competition. Generally, competing on features, brand recognition, or breadth of product is a non-starter. Instead, startups often differentiate on intangibles: a nuanced product focus, user interface, and customer experience.

Depending on your market and product offering, phone support and sales can be critical components of your operation. But, if you’re a cash strapped startup, you’re practically left to do these over Google Voice or your own phone number. While Google Voice can be fine for personal use, it’s a far cry from a professional business phone solution. And most people probably don’t want their personal phone number out for the world to see and call at all hours of the day.

Parakeet enables you to have a complete business phone solution with custom greeting messages, call queues, call blasting, voicemail, operating hours, and so much more — completely free. Not “cheap.” Not “free if you give us your credit card.” Just free. Up to 3 users and 2,000 minutes per month. This is a powerful offering for startups that enables them to provide the image and security that comes with portraying themselves as an established brand.

Free trials don’t always make sense

Free trials work well for products that are immediately and independently useful. They give your customers some amount of time to use the product before they’ve committed to buying it. For the business, ideally the time is just long enough for customers to reach the “Aha Moment” and become hooked. Everyone wins in the end: the business gets a paying customer, and the customer has had the chance to decide that the product provides enough value to be worth paying for.

Phone systems don’t work this way. They require two halves: the business that’s using the solution, and their customers, prospects, or partners on the other end that they’re talking with. If you know that your business number vanishes in 14 days unless you decide to pay up, you’re disincentivized from putting it on your website, or getting your customers to call you. As a result, you’re not really engaging with our product. Effectively, we’ve made you commit to buying our product before you’ve had a chance to use it, and thus we’ve wasted your time with our free trial.

Our free tier gives our customers the opportunity to spend time with the product before they make a decision to pay for it. Go ahead and put the number on your website, and let your customers know they can reach you for support. When you start getting calls, and get a chance to experience our product, you’ll begin to see the value. We feel that this is a much better time to ask you for your money (or, if you really don’t want to, you can take your number elsewhere — we never hold numbers hostage). By this point, we’ve had the pleasure of demonstrating our product to you, and you’ve had a chance to love us.

It’s the right move for our business

Finally, this is just the smart move for us. Today’s startups are tomorrow’s enterprises, and some of our customers may go on to become the next Facebook, Slack, or AirBnB. Enabling us to capture them in their earlier stages means we get to grow alongside them, learn from their challenges, and build a better business for ourselves as well.

As mentioned previously, we’re a small startup, with a lot of our own learning and growing to do. If we can’t comfortably say we understand the challenges of the small to mid-market companies that use our product, how can we build something to properly solve them? Getting in early and becoming a part of the journey with our customers from the start is our way of making sure we don’t face this challenge, and it’s both a humbling experience and a powerful lesson.

So, those are the guiding values behind our free tier. We’re excited about this new path for us, and about the roadmap of features we have planned ahead. There’s a lot we’re cooking up to help teams level up their sales and support (hint: SMS is coming very soon), and we look forward to continuing to serve our customers.

We’d be remiss if we didn’t take this opportunity to invite you to check us out and try Parakeet for your own team today. Of course, if you have any questions, don’t hesitate to reach out. We love talking to other companies, and are always up for a chat about your needs, feedback, or really anything you want to talk with us about.

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