It depends on your cost per user. For example, this model doesn't work well for web analytics companies because they collect a lot of data and need to pay for it. Also, it's important to consider customer acquisition costs.
Ideally, you need to understand what you get in return. For example, Mixpanel and Heap analytics allowed using their services for free in exchange for a badge. That allowed those companies to grow without any marketing budgets.
As to Mixpanel and Heap Analytics, they adjusted their free plans. Now the functionality is significantly limited and they delete historical data. But initially providing more features for free was beneficial for them.
Hey Pete,
It depends on your cost per user. For example, this model doesn't work well for web analytics companies because they collect a lot of data and need to pay for it. Also, it's important to consider customer acquisition costs.
Ideally, you need to understand what you get in return. For example, Mixpanel and Heap analytics allowed using their services for free in exchange for a badge. That allowed those companies to grow without any marketing budgets.
But sometimes it's healthier to provide services without a free plan:
baremetrics.com/blog/freemium…
As to Mixpanel and Heap Analytics, they adjusted their free plans. Now the functionality is significantly limited and they delete historical data. But initially providing more features for free was beneficial for them.
interesting story on baremetrics.