SaaS Trial Pricing: Examples and Best Practices

SaaS Trial Pricing: Examples and Best Practices

If you’re like most SaaS founders, you’ve probably struggled to find the sweet spot in trial pricing. This is especially complex when trying to balance acquisition, retention, and expansion.

Let’s take a look at a few examples that can help you pin down the perfect pricing strategy for your product!

TL;DR

  • Companies with high revenue per user (RPU) and a low cost per lead (CPL) should consider a trial pricing strategy since it filters out unqualified leads while still offering an accessible price for prospects.
  • An effective way of increasing the trial to paid conversion rate for your SaaS would be to send a trial expiry email three or more days before the period ends to remind users about all the benefits they’ll be getting for the price of your product.
  • If you have a complex SaaS product then you should consider using both a free trial and a demo in your acquisition strategy.
  • A freemium pricing model may not be necessary if your product solves the problem better than competitors while charging a lower price.
  • You should offer gamified trial extensions to ensure that the users with the highest chance of converting into paying customers have enough time to test the product.

What is a trial pricing strategy in SaaS?

Put simply, trial pricing is a sales tactic used by SaaS companies where they reduce the price of their product for a limited time or as part of an introductory offer. Unlike the more popular free trial, this strategy can filter out unlikely customers since there’s still a cost for testing the product.

Free trial vs paid trial vs freemium

Free trials do have benefits compared to paid trials as they have zero barriers to entry and thus tend to bring more trial users in. They also instill a sense of urgency in trial users since they only have a limited time to test the product out before they have to pay full price.

However, the higher signup volume comes with the drawback of lower conversion rates since you’re letting more unqualified leads in. These nuanced differences are why it’s important to consider whether your product would benefit more from a free trial vs a paid trial.

Lastly, companies with a freemium pricing strategy need to focus on delivering as much value as possible during the initial free period since it could become a lot harder to upsell a user once they’ve settled into your freemium plan.

How long should a SaaS trial be?

There’s no one-size-fits-all answer since the ideal length for your free trial will depend on how complex the product is, pricing, and the strategy your company uses to acquire customers. If you can reduce the time-to-value and give users that AHA moment right away then there’s nothing wrong with shorter free trials.

As a general rule of thumb, most trials are at least seven days long and the majority are in the 14-day to 29-day range. The situation is different for every product so don’t be afraid to offer a trial longer than 30 days if there are a lot of complex features that the user needs to get familiar with.

 

 

 

 

 

 

What are the different types of SaaS trials?

You might think that all you need to do is offer a free trial, decide how long it should be, then start driving potential customers to your lead generation funnel. In reality, there are actually a few approaches you could take with your free trial to try and get the best results for your specific business model.

Here are a few strategies you could use for your free trial:

  • Free trial with or without a credit card. Asking for a credit card in your free trial flow could reduce leads but increase conversion rates so it depends on what your current product metrics look like.
  • Free trial with freemium plans. Products with a freemium version will often have longer and more value-dense free trials to get users to convert to a premium plan before they get complacent with the lite offering.
  • Free trial after a demo. If your product is particularly complicated then it may be wisest to teach customers the basics before letting them start their free trial.
  • Free trial with gamified extensions. Offering an extension on your free trial can give customers more time to experience the full value of your product while adding a gamification element will boost engagement during this key stage in the customer journey.

Free trial with credit card

While users often think that SaaS companies ask for their card in hopes that they’ll forget about the free trial and get charged, this actually isn’t the case. It’s more a matter of minimizing signup costs that don’t lead to a conversion and/or filtering out leads that aren’t likely to become customers.

When deciding whether or not you should ask for a free trial, it’s important to think about three metrics:

  • CPL
  • RPU
  • COGS

In essence, the cost per lead, revenue per user, and cost of goods sold.

If you have a high cost per lead and bring in a lot of revenue per user, then asking for a credit card would likely be detrimental since the cost of goods sold is marginal compared to lead generation and future earnings from those potential customers.

Conversely, if you have a low cost per lead and don’t make a lot of money from each new user then using credit card information like a sieve can save you from spending business resources on leads that aren’t likely to convert.

Medium makes less than a dollar of revenue per week for every premium user on their platform which is why they ask for credit card information before letting users into their 14-day free trial.

Medium free trial
Source: Medium

Free trial without credit card

It’s important to realize that the strategy of offering a free trial for software products is to offer users a low-risk method of testing the solution. That’s why many SaaS teams believe that asking for a credit card would contradict the low-risk, low-friction strategy behind offering a free trial in the first place.

Adobe is a prime example of how to acquire customers through low-friction, no-card trial offers as they let potential customers access their entire product family without entering any payment details.

Adobe free trial
Adobe free trial example

While offering a free trial without the need for a credit card removes a key obstacle for potential customers, it’s important to remember that reducing friction can be a double-edged sword. You’ll undoubtedly get more signups but you could also see a drop in your trial to paid conversion rate.

This is a given when opening your product up to more unqualified leads so you have to make sure that the numbers still make sense for your pricing strategy and product as a whole. Giants like Adobe can certainly sustain growth with lower revenue-per-user (RPU) but that isn’t true for all SaaS companies.

Free trial with freemium plans and limited functionality

Let’s start by getting a common misconception out of the way: a free trial doesn’t serve the same purpose as freemium pricing models. Free trials are designed to offer full access for a limited time while freemium plans offer limited access for as long as it takes to get the user to upgrade.

While they serve different purposes, combining a freemium plan with a free trial could help you build a well-rounded pricing strategy. Hubstaff is a great example of this as they offer both options in their pricing model.

Hubstaff freemium pricing
Hubspot free trial with a freemium plan

But how do you actually decide which one is right for your product? Or if you should use both even?

Well, there are three things to consider:

  • How big your total addressable market (TAM) is
  • How complex your product is
  • How competitive your product is (i.e. does it solve a problem better than other companies while costing less)

First off, if you’re offering a niche product with a small TAM then offering a freemium plan could be detrimental to your pricing strategy since it will be cannibalizing leads that could have otherwise become paid users

Secondly, those who have simple products might find that a 14-day or 30-day free trial is more than enough to show potential customers what they’d get with a premium plan. In such cases, freemium plans aren’t really necessary and could just serve as a barrier to higher conversion rates.

Finally, you need to consider how competitive your product is as well as how saturated its market is. If you’re already solving problems better than competitors, offering more features, and users still pay less for your product then you’re likely competitive enough that you don’t really need a freemium pricing strategy.

Free trial after a demo

While simple products may be able to get by with free trials alone, companies that offer software with complex features should consider adding a demo into the mix. In fact, that’s the same pricing strategy we use here at Userpilot since we know our SaaS product needs a bit of explaining to ensure users get the most value out of it.

Userpilot demo
Userpilot demo

Free trial with a gamified trial extension

The dilemma with trial length is how to offer enough time for a potential customer to test your software out adequately without giving them too much time that they sleep on the value. Many SaaS companies struggle with low engagement rates when they offer longer trials to the tune of 30 days for this very reason.

Having a longer trial also means you’re burning more resources on users that may not convert. For example, ProdPad found that they could tell with 85% which users would convert only nine days into their 30-day trial. To counteract this, they shortened their trial period and introduced a gamified extension system.

ProdPad gamified trial extension
Source: Prodpad

You’ll see that they also have credit card information as a challenge to extend the trial which is a creative way to get around the decision of whether or not to ask for payment information. After all, users who are prepared to volunteer their credit info two weeks into the trial are likely to sign up for a premium plan later.

SaaS trial best practices to increase the trial to paid conversion rate

Every SaaS company should do work overtime to increase their trial to paid conversion rate by making the value that their software provides abundantly clear.

This is even more important if your product has a freemium plan since the last thing you want is for a new user to get comfortable in that tier. If they don’t see the value of your premium plan right away, they may never upgrade which means their acquisition costs will go down the drain.

Here are some best practices that can help:

  • Welcome screens for personalized onboarding
  • Live webinars for interactive user education
  • Tooltips that highlight secondary features
  • NPS surveys to gather customer feedback
  • Trial expiry emails

Use welcome screens to personalize the onboarding process

If you want to personalize the user onboarding process, there’s really no better way to implement that strategy than by adding welcome screens. Personalized onboarding is all about offering a tailored, contextual onboarding experience but how would you go about doing that if you don’t know your customer?

Adding UI modals like welcome screens can help you understand the goals and job-to-be-done (JTBD) of new users right from the get-go. Canva is known for its usage of welcome screens during onboarding to help with customer segmentation.

Canva welcome screen
Canva welcome screen

Welcome screens can also be used to tell users what they should try out while they have access to your product. myPAT takes this very approach to give users an idea of what they should test during their 14-day free trial.

myPAT trial welcome screen
myPat welcome screen

Invite for a live webinar to educate customers in an interactive way

If your product has features that could be difficult to understand throughout the span of a free trial then you should consider inviting your trial users to an educational webinar. After all, you don’t want customers to come out of your trial periods more confused than when they came in so a quick product demo is best.

This is the same SaaS sales strategy we use at Userpilot.

Userpilot product training
Userpilot live webinar invitation

Across multiple SaaS business models and strategies, the number one priority stays the same: educating users on how to reap the most value out of our product. Webinars are perfect since they use the power of live interaction to show users how everything works and take questions in real-time.

By showing users the ropes when it comes to usage, they’ll be less concerned about the price your company charges and more excited about the features they’ll get to access throughout the trial. At the end of the day, the core mission of every SaaS company is to solve a problem, let people know, and generate revenue.

-Michael Nelson, CEO of webinar.net

Sure, hosting webinars takes time, money, and management but if it increases your recurring revenue or optimizes the trial conversion rate then that still makes it worthwhile. You can also use these webinars as an opportunity to subtly advertise the other products that your company offers.

That increases the odds that they’ll become a customer for one of your products even if it isn’t the same solution that they signed up to the trial for. Atlassian has been able to continuously increase their expansion MRR by cross-selling customers on their entire software lineup.

Atlassian cross-selling
Source: Atlassian

Highlight secondary features through tooltips to drive product adoption

Tooltips always shine when it comes to in-app guidance since they’re perfect for highlighting the subtler elements of a software solution. They’re especially useful for a software company with secondary onboarding flows.

Userpilot tooltips
Postfity tooltips created with Userpilot

Remember, the main reason you’re offering a free trial is to give potential customers the chance to test out your product and its various features. If they’re only interacting with the surface-level features then they’re missing out on the high-value, unique functions that help you differentiate yourself from the competition.

At the end of the day, it’s these secondary features that could compel them to pay for a premium plan and keep them from switching to a competitor once they become a paying customer.

Use NPS surveys to collect customer feedback

Userpilot NPS survey
NPS survey

The best way to study your customer is to run microsurveys that track NPS feedback. This strategy can help you gather insights from both freemium and premium users. One plan you could implement with this feedback model would be to compare the features used by customers who have upgraded their subscriptions.

Tracking the engagement of high-usage customers could be a great way to isolate sticky features and promote them heavily during the trial period. You’ll also be able to identify many complaints from current customers that could impact your trial to paid conversion rate.

Collecting feedback has never been easier since there are plenty of NPS solutions to choose from. For example, Userpilot lets you collect NPS data from every user on your site and tag common keywords in their feedback.

Userpilot NPS feedback
NPS surveys in Userpilot

Send an email reminding users about the free trial expiry

You don’t want the trial to end abruptly before our users have the chance to try everything out which is why sending an email reminder before its expiry is key. This is especially crucial if you made them use their credit card upon signup since they might feel blindsided if they pay for a product without knowing it.

Make sure you send your reminder email at least three days before the trial is set to end. You should also take this prime opportunity to remind them about what your product does best. One last roundup of the benefits of a premium plan like advanced features or more granular management could be enough to seal the deal.

Basecamp is one example of how reminder emails can be used to increase your trial to paid conversion rate.

Basecamp trial expiry email
Basecamp free trial reminder

Conclusion

As you can see, finding the right trial pricing strategy for your product doesn’t have to be rocket science. If you look at examples from successful SaaS companies and find the pricing models that fit your specific needs then getting users to convert becomes a lot simpler.

Want to have better insights into how your users behave inside the app during the free trial period, collect feedback in a contextual way, and improve your trial to paid conversion rate, then get a Userpilot Demo to get started right away.

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