People will use anything if it’s free. We want people to use it because they like it, not because it’s free.
Garrett Dimon on pricing strategies for web-based software. There’s a whole lotta insight in his excellent Bootstrapping a Software Product slide deck, so go flip through it. He also reports that for his product, Sifter, the lowest price points have more rapid turnover and often more demanding users.
This is an often overlooked phenomenon when it comes to pricing strategies. The (sane) argument for free accounts is that it will persuade people to try your product and, if they like it, eventually upgrade to a paid account.
However, if you offer free accounts you’ll attract many people who use your product simply because it’s free. These customers will never upgrade; if they feel like they’ve hit the ceiling of your free account, they’re far more likely to start searching for an alternative product. When this happens, any indirect value they added to your product (community involvement, referrals, etc.) disappears along with them, and you’re stuck holding on to their data indefinitely.
After all, low-price shoppers are loyal to price, not to you.
