Thread by @fredsters_s

We turned off our self-serve signups and replaced our freemium plan with a $200 per month floor and it has generated... a reaction.

A thread with some thoughts on why we did this and what the impact has been so far to our business

https://twitter.com/ryanseanbadger/status/1718847476948697426

First off, some context. Our active customer base was composed of the following before the change:
- ~200 freemium customers not paying anything
- ~200 freemium customers paying something (~$200 ARPU)
- 36 contract customers with low 5-figure ACVs

This was the result of trying PLG.

Our goal with PLG was to widen the top of funnel so that price wouldn't be an obstacle to trying the product;

the theory goes that great customers can start from anywhere, and that, especially for developer tools, trialers are put off by $

This is actually not about going up or downmarket, as this popular thread assumes.

Our ideal customer profile has remained identical throughout

https://twitter.com/GergelyOrosz/status/1718885197385486788

we found that, for our product (QA, selling to devs), the premise of PLG *did not work*

specifically, very few users grew through the free -> small paid -> large paid motion

Most users that were paying 4 figures per month on self serve engaged heavily with us and ramped quickly

These customers wanted to speak with our team and wanted a company they could rely on and as such, wanted to pay something material

The free users, by and large, were looking for something free. That was the main goal and their primary evaluation criteria

For us these free users were a significant drain on the business. This chap nails why

https://x.com/forgebitz/status/1718889407988596775?s=20

And these free users were largely identical, firmographically, to the customers that happily paid us $1000 per month. Customer A and B have similar size, industry, headcount.

The only difference? Customer A pays us $3000 per year and Customer B pays us $0 per year.

We got similar feedback from both customer types, and if anything, more support load from the free users.

So freemium PLG did not work for us -- it self-selected for customers that cared more about cost than value.

We turned off self-serve largely to get closer to our customers, so that we can talk to them and qualify them before we invest in them.

Self-serve, especially with devs who don't really want to talk to you, is really hard when you live and die from feedback

The upside of a wider top of funnel did not outweigh this downside for us.

We have lost some of our free and low-paying customers. Obviously we don't want to hurt anyones business and that sucks. I would love if this model worked for our business and we could continue supporting folks like Ryan

But the impact has actually been fantastic. Some highlights:
- ~$1m of sales pipeline generated in 3 weeks, ~$100k already closed
- ~10% of the free customers converted to paid
- ~50% of the paying customers converted to the new pricing model

more importantly, perhaps, we now have a daily drumbeat of conversations with potential customers where we can test messaging, positioning, and pricing

the exceptionally slow feedback loop of PLG is probably the biggest hidden cost

write code, talk to users