We're launching a free plan, and I’m scared to death.
Here is why we still do it and how it will 10x our business
👋 Hi, I’m Iron from Simple Analytics, and welcome to my newsletter, The Road to 1 Million ARR. Sign up for weekly insights, growth strategies and playbooks on how we are growing our business to 1 Million ARR. Fully transparent.
Adriaan started Simple Analytics five years ago because he was fed up with Google Analytics. It was clunky, overly complex, and, by all means, not privacy-friendly.
He did what engineers tend to do in this situation: Build a better solution.
At first, he didn’t think much of it, but here we are five years later:
💸 32K MRR
❤️ 1300+ users
🧑🤝🧑 Team of Two
✊ Zero VC dollars raised
Adriaan impressively grew to 10K in monthly recurring revenue (MRR) in the first two years, but growth plateaued. Then, I joined, and we grew to 32K together.
I think we are at a new inflection point. We could keep going with some slow, steady growth, but I feel there is more to it.
I actually think we can grow 10x from here.
Insert Free plan
We’ve thought long and hard about adding a free plan.
We have a great business, and I don’t want to fuck it up, but adding a free plan does feel like the right thing to do.
Adding a free plan is not a pricing strategy. It’s an acquisition strategy.
Most of our customers found Simple Analytics because someone referred us. Word of mouth is already our strongest growth channel, and adding a free plan will leverage this 10x more.
More interestingly, I figured that “our most loyal power users” are not the ones driving the most revenue.
Yes, I found that our biggest fans are not the ones paying the bills.
That is because we have two distinct customer segments:
1. Solo founders and developers with side-projects
2. SMB’s
Let’s just call the first group solo founders. They are usually on the lowest-tier plan, while SMBs are on our “Business Plan.”
Our solo founders segment does not pay much, but they are worth every dime because they often refer us to businesses.
This happens because the developer-with-a-side-project who likes our product also works in a business and tells his/her boss to ditch Google Analytics for Simple Analytics.
My hypothesis:
If we make the barrier of entry even lower (read: free) for the first group, we could get even more recommendations to businesses that pay.
Why I think this will work
Many people hate the new Google Analytics 4 version. However, Google Analytics still has a 90% market share in this massive market.
50% of the websites on the web use an analytics tool, and 90% of them use Google Analytics 🤯🤯
Why is this? Why are so many people still using Google Analytics, even though they hate it?
Two reasons:
A. It’s the only thing people know
B. It’s free
We are competing with one of the most well-known brands in the world.
And not only that…
We are competing with a paid product vs a free product.
A free product built by Google vs. a paid product built by two random dudes from the Netherlands (with matching outfits).
Yes, that can be a difficult sell sometimes.
Obviously, we’re not trying to beat Google. We’re idiots, but not stupid. We won’t even be a bleep on their radar. But we are leveling the playing field.
Adding a free plan will do two things:
A. More people will give us a try
B. More people will like our product and refer us
That sounds great and all. But all of this is hypothetical and I’m scared it will backfire and tank our revenue.
I’m scared to fuck up
We have never tried a “free plan” because we are a bootstrapped company. Meaning that we actually need to make money to keep the lights on.
We are not a VC-funded company that can do without any revenue for a very long time until they figure it out.
Also…
❌Free plan eats revenue away from your paid plan
❌Paying users = validation. Free users are not.
❌Free users don't provide the feedback you need
❌Free users require more support
❌Conversion to paid is very low
Aaarrrghhh….
However, the beautiful piece in Lenny's newsletter perfectly outlined the requirements for whether freemium works for your business.
🟢 Massive potential user base? This is based on the fact that only a small percentage will convert into paying customers, so you'll need a lot of users.
> This is true for us. We're in a massive market.
🟢 Short time to value? The faster the setup, the better. If there are fewer hurdles, the more likely your free users will actually use your product.
> This is true for us as well. Setting up Simple Analytics costs minutes, not hours.
🟡 Is the product foundational for the user? If you solve important issues for your users, they are more inclined to use and stick to your free offering.
> I'm not too sure whether we are actually believed to be foundational.
🟢 Low incremental cost to serve each customer? Supporting a lot of free users who may never convert takes a lot of time and makes this business model not viable.
> We are good on this one. We already have 1300 users, with only Adriaan and me doing support.
🟢 Do free users contribute to your growth model? Are there any viral loops that help drive more and more users to your product?
> Yes. Most of our current growth is through Word of Mouth already.
Well, this doesn’t look too bad for us! We tick most of the boxes.
I believe that if we want to grow to infinity and reach our 1 Million ARR goal, we should give this a try.
Final Thoughts
It's always a bit nerve-wracking when trying something new, but I’m confident we’re making the right call here.
I don't care if my free users never convert to paid.
I hope they form a “ little army of Simple Analytics marketers” who talk about us and show us to their employers/friends because they really like what we built.
What if we could 10x our free user base? Or 100x?
Would we cannibalize our paid plans? Most definitely in the short term, but it might just move the needle to grow to infinity.
I'm scared, but convinced this is a shot worth taking. I’ll report back on the outcome 🫡
And if you agree with me that GA4 sucks, you now know there is a free alternative out there.
Cheers ✌️✌️
Iron
The strategy with a free tier is a bold move but a logical one in the context of competing with Google Analytics. The focus on virality through indie developers, who become "influencers" for SMBs, is genius. The team correctly assessed the market potential: even a 1% conversion rate from millions of GA4 users is significant. Kudos for transparency and boldness!