Welcome folks! 👋

This edition of The Product-Led Geek will take 8 minutes to read and you’ll learn:

• Why freemium is much more than a pricing strategy

• 7 traps to avoid when implementing a freemium strategy

• A quick way to assess the suitability of freemium for your product and business

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The 7 Most Dangerous Freemium Pitfalls To Avoid

Most B2B SaaS companies are attracted to freemium models as a growth accelerator, but implementing them effectively requires more strategic thinking than simply creating a "free forever" tier.

While at Snyk, I led all of our PLG efforts including our freemium GTM strategy, and have since advised dozens of growth-stage companies on similar journeys.

Here are the seven most dangerous pitfalls I've repeatedly seen derail promising freemium initiatives - and the specific strategies to overcome them.

Pitfall 1: Treating Freemium as a Pricing Strategy Rather Than an Acquisition Strategy

Many companies mistakenly view freemium as just another pricing tier.

In reality, it's primarily an acquisition strategy that trades monetisation for user growth.

How to avoid it:

• Track acquisition efficiency: Measure free sign-up to paid conversion rates across acquisition channels

• Understand the value of free users: Calculate the LTV of free users (here’s how)

• Make it visible: Create clear dashboards showing free user acquisition cost vs. eventual revenue

• Reframe internal discussions: Focus budget discussions on acquisition efficiency, not lost revenue. I've found success by consistently asking "what would it cost us to acquire these same customers through paid channels?"

Pitfall 2: Creating a Free Plan That Delivers Too Little Value

The most common freemium mistake I’ve seen is creating a free tier so limited that users can't experience your core product value, making conversion impossible.

How to avoid it:

• Get activation right: Design your free plan around delivering your product's core aha moment and driving users/teams to habit

• Limit quantity, not quality: Focus on usage limits rather than feature limitations that would prevent habit formation.

• Solve one problem completely: Ensure users can solve at least one meaningful problem completely

• Test with fresh eyes: Test your free experience with new users regularly to verify value delivery

Pitfall 3: Creating a Free Plan That Delivers Too Much Value

The opposite problem can be just as damaging - when your free tier is so generous that users have no incentive to upgrade.

How to avoid it:

• Map expansion triggers: Identify natural expansion triggers (team growth, usage volume, etc.)

• Signal the journey: Create clear upgrade paths aligned with user success

• Add visual cues: Implement usage meters showing proximity to limits

• Find the sweet spot: Analyse behavioural data to identify value thresholds where upgrades make sense (At Snyk, it was a 200 tests monthly limit)

Pitfall 4: Poor Free-to-Paid Customer Journey Design

Many B2B SaaS products fail to guide users from free value to paid conversations at the right moments.

How to avoid it:

• Document the e2e journey: Map the entire journey from free signup to paid conversion

• Time your prompts: Create contextual upgrade prompts tied to specific user actions. showing upgrade messaging after a user has successfully completed a valuable workflow works significantly better than generic banners

• Create robust scoring models: Develop a Product Qualified Account (PQA) scoring system. Must be team/account based in B2B.

• Minimise friction: Design low friction upgrade paths (self-serve and sales-assisted)

• Optimise timing: Test different conversion timing - sometimes slower is better. Users/teams need to be ready to buy.

See here for more details on monetisation awareness:

Pitfall 5: Neglecting the Economics of Free Users

Free users have real costs, and ignoring this reality can lead to business model challenges.

How to avoid it:

• Know your costs: Calculate your Cost to Serve (CtS) for free users.

• Set appropriate boundaries: Implement reasonable usage caps to prevent abuse.

• Evaluate alternatives: Consider time-limited free trials for high-CtS products.

• Design for efficiency: Design your infrastructure for cost efficiency at scale (but don’t invest in this too early).

• Track retention: Track and optimise free user retention (see here) - this becomes your leading indicator of sustainable growth.

Pitfall 6: Sales Team Misalignment

Sales teams often view free plans as a threat rather than an opportunity, causing organisational friction.

How to avoid it:

• Do PLS the right way: Implement a Product-Led Sales model that rewards expansion

• Align compensation: Create sales compensation plans that value free-to-paid conversion

• Empower with data: Build sales tools that leverage product usage data

• Change the mindset: Land small to win big - incentivise smaller initial deals with strong expansion

• Focus on value-add: Train sales on consultative approaches that add value beyond what the product delivers alone

Pitfall 7: Freemium Without a Growth Strategy

A freemium model without intentional growth loops is like having a sports car with no fuel.

How to avoid it:

• Build network effects: Design network effects into your product. Snyk's team invites and security issue notifications created natural growth loops

• Think team-first: In B2B you must create team-based activation, engagement and retention metrics, not just individual user metrics

• Enable sharing: Build viral sharing mechanics into core workflows

• Support with content: Develop content and community strategies around free user value (See Elena’s excellent post on UGC)

• Identify expansion patterns: Analyse behaviour patterns to identify expansion opportunities

The Bottom Line

Freemium isn't right for every B2B SaaS product.

Before implementing, honestly evaluate these five factors on a scale of 1-5:

• Product complexity: (5 = simple, 1 = complex) Can users experience value without significant onboarding?

• Value delivery timeline: (5 = immediate, 1 = delayed) How quickly does your product deliver measurable results?

• Cost of serving each free user: (5 = negligible, 1 = substantial) Have you calculated all costs, not just infrastructure?

• Target market price sensitivity: (5 = highly sensitive, 1 = price insensitive) Will your ICP actually convert or are they perpetual free users? See here for more on pricing.

• User-to-buyer relationship: (5 = direct, 1 = distant) Can users influence purchasing decisions?

Interpretation:

• 20-25: Strong freemium candidate inc self-serve monetisation

• 15-19: Potential for hybrid freemium/trial approach with PLS

• Below 15: Consider alternative models

That’s definitely not a water-tight model - but it will give you a good indication and get you thinking about the right things.

When implemented correctly (and in the right context) freemium models are amazing.

But success requires strategic thinking about value delivery, customer journeys, and organisational alignment.

I've seen companies triple their growth rate with freemium and I’ve seen others where it’s nearly tanked their business. The companies that succeed do so by treating freemium as a comprehensive business strategy, not a pricing tier.

Have you been tripped up by any of these?

Anything I missed?

And if there’s anything you want me to deep dive into here, hit reply and let me know 🙌

THAT’S A WRAP

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That’s all for today,

If there are any product, growth or leadership topics that you’d like me to write about, just hit reply to this email or leave a comment and let me know!

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Until next time!

— Ben

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