🗞 What's New: Free trials and freemium...bad business?

New startups are usually looking to achieve breakthrough growth:

• Are the free trial and freemium business models preventing you from hitting the growth you need to reach the next level? Founders weigh in on the relevance of these models, and whether it's time to retire them.
• Many indie hackers have multiple products. If you're one of them, consider using each product as an acquisition channel for the others. Here's how.
• Founder Omar Farook wasted over $250,000 of his SaaS startup's launch revenue, trapped by multiple new founder pitfalls. Below, he shares the 7 costly mistakes he made, and how to avoid them!

Want to share something with over 100,000 indie hackers? Submit a section for us to include in a future newsletter. —Channing

💸 Stop Offering Free Trials and Freemium

by Chris Monk

For startups to succeed, they need to find breakthrough growth. Think of the breakthrough as that moment where growth becomes easy, and paying customers and revenue flood into the business.

Not finding breakthrough growth is the reason why 90% of startups fail. But why do 90% of startups fail to find breakthrough growth? Read on for more!

The big lie

Many startups fail to reach breakthrough growth because they've been told this lie: The key to growth is a great product.

And so, with that belief, they make one (or both) of these mistakes:

1. They spend too much time perfecting their product, and not enough time marketing. This means that they never give themselves the chance to find breakthrough growth.
2. They market only the full product (as opposed to the free trial) to potential customers, which is an ineffective growth strategy because it creates sales resistance.

Neither the freemium nor free trial business models stop startups from making these mistakes. Why? Because for these business models to work, the product needs to be perfect. And so, the founders are very likely to make mistake number one.

And when it comes to mistake number two, well, both the freemium business model and the free trial model trigger sales resistance. Why? Because, in order to fully benefit from the product, customers know that they need to pay money. So, their sales resistance is triggered, leading to the abysmal conversion rates that we see in freemium or free trial models.

Check out the BLUNT method for more on avoiding this lie!

Premium freemium

Thomas Varekamp says that free trials and freemium are absolutely still worth it:

Having a free trial or freemium model gives the business valuable customer data on how it can improve the product to make it worth the price.

For example, usage data can be analyzed to see what kind of customers interact with the product the most, and how.

If the free trial user doesn't convert to paid, you can ask them why. This is extremely valuable information that you can use to improve your product.

Chris agrees, adding that it's mostly about the timing:

We've been running a freemium model since launch. While I do agree that it's not right long-term, it helped us get enough eyeballs on the product at the start to get the feedback that we needed to improve.

Solutions to consider

Dengagess believes that freemium and free trials are bad for companies across the board:

Free trial models are a great way to get users engaged with your product and start using it right away. However, they often don't work out well for businesses. Why? Because you're giving away something valuable (your time) for free, and if you don't have a good enough value proposition, people won't stick around long enough to convert them into paying customers.

Freemium models aren't just bad for startups; they're also bad for established companies. When you give away something valuable for free, you're essentially asking someone to pay for it later. That's not how business works. You need to make sure that what you're offering is worth the cost before you ask anyone to pay for it.

How do you solve this conundrum? By addressing these elements:

• Not enough value proposition: The biggest mistake that I see founders making is assuming their product is worth the price tag. If you're charging $10 per month for a service, you need to make sure that the service you provide is actually worth that amount, or more.
• No customer acquisition strategy: If you want to build a successful startup, you need to know exactly who your target audience is. You need to figure out where they hang out online, what kind of content they consume, and what makes them tick. Once you do that, you can craft a customer acquisition strategy that gets you in front of those people.
• Too many features: When you launch a product, you should focus on building only one thing. If you try to add too many features, you'll confuse your users and lose them. You'll also end up spending a lot of time developing things that no one wants.
• Poor product design: Your product design doesn't matter much if you're launching a freemium model. People will use whatever tool is easiest to use. So, if you're going to offer a free trial, make sure that it looks nice and feels intuitive.

Pricing isn't about getting rich quick. It's about figuring out what your product costs, then setting a fair price based on that. If you set your prices too low, you'll never make any money. Conversely, if you charge too much, you'll alienate potential customers.

What are your thoughts on free trials and freemium? Share below!

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📰 In the News

from the Volv newsletter by Priyanka Vazirani

📸 TikTok is now copying Instagram with "Photo Mode."

🎁 Consumers want to purchase holiday gifts earlier this year due to inflation.

🎥 Streaming service mergers are coming.

🛑 Making employees turn on webcams may be a human rights violation.

🌲 Your body will turn into a tree at these new green cemeteries.

Check out Volv for more 9-second news digests.

🛠 Build Products to Use as Acquisition Channels

by James Fleischmann

Many indie hackers have multiple products, and most of the benefits that they share are pretty obvious: More income, diversification, learning, etc. But one less obvious thing is that each product can serve as an acquisition channel for the others.

Cross-promotion usually refers to different companies promoting each other for mutual benefit, but who says that the companies can't be owned by the same person?

How to make your products work for each other

Here are a few tips and tactics:

1. Set the stage:

• Make related products: This is probably the most important part. Your products need to be similar. Not so similar that they cannibalize each other, but similar enough that customers of one will be interested in the other. In other words, they should be in the same market. Niche down and make similar, but distinct, products.
• Branch out to other product types: You don't need multiple SaaS products. It'll spread you too thin. Instead, try other types of products that are easier to create and maintain, like e-books, courses, etc.
• Build your brand: People will be far more likely to purchase your other products if they know and trust you as a founder, than to take the recommendation of a faceless brand.
• Make it known: As you build your brand, make sure that your product portfolio is clear to your community. Link your products across all platforms.

2. Cross-promote:

• Leverage your content and your email lists: Reference the other product(s) in your content, including your blog, videos, social media, etc.
• Use your product as a funnel: While you'll want to be very careful to not negatively impact UX, it's possible to promote your app at specific high-impact moments in the user flow. If there is a user action that might put someone in a particularly good position to find value in your other product, send a transactional email or in-app notification with a call to action.
• Offer discounts: It's usually a good idea to offer customers of one product a discount on the other. Contests and giveaways can also add excitement. If you have multiple one-time payment products, consider offering a discounted bundle.
• Capitalize on ad space: If you're sponsoring something or buying ad space, consider advertising both products together. Hint: This won't always be a good idea. You don't want to dilute the potency of the ad.
• Use exit-intent popups: You can use these to send traffic to your other product. Alan Warsoff of SelfDecode did that, and saw a 1.2% clickthrough rate.
• Apply your learnings from one to both: Use the learnings of one product to benefit the other. This is particularly helpful when you're A/B testing, as the results and learnings can have double the impact. Also, you can run riskier tests on the smaller product to play it a little safer.

Long story short, if you're already going through the trouble of building multiple products, let those products work for you as much as they can. Cross-promote and get creative to make the most of the time you spent building them.

Have you tried this tactic for customer acquisition? Let's chat below!

Discuss this story.

🧠 Harry's Growth Tip

from the Marketing Examples newsletter by Harry Dry

“The role of your first line is to get me to read the second one.”

—Jo Sugarman

Go here for more short, sweet, practical marketing tips.

Subscribe to Marketing Examples for more.

⛔️ Omar Farook Shares Seven Post-Launch Mistakes to Avoid

by Omar Farook

Hi, indie hackers! I'm Omar Farook, founder of Glorify, an e-commerce design agency.

In 2013, I started buying and selling white label products through Amazon FBA. I sold out in my first month, and the Amazon seller community took notice. Glorify was born soon thereafter! By 2016, we had a small team, and demand for our work grew. We realized that there was a gap in the market: There was no e-commerce focused design tool that could help founders quickly drop a simple product photo onto a template, remove the background, and showcase features through beautiful graphics.

We started working part-time on a basic MVP, and launched on Product Hunt in September 2019. Our deal leaked into many early adopter communities, and I wrote a detailed article about it here.

On day one, we hit over $10K in sales! By month one, we had crossed six figures in total revenue. By the end of the Black Friday deal period, we had crossed $300K in sales!

I had never seen or made so much money this quickly before. But what followed was a series of huge mistakes that I would regret. I'm diving into those mistakes below, and hopefully that will help other founders avoid making the same errors!

First mistake: Scaled marketing too early

After Black Friday, we thought that an aggressive amount of activity on social media would create engagement and drive sales. But we realized that the frequency of posts and content was not what truly drove sales. It was a combination of pay-per-click (PPC) to drive leads and sales, customer success to help users troubleshoot, and founder-led activity on community channels to build trust and reduce refunds.

Always determine the minimum that you need to sustain existing growth. We hired three marketing leaders and a marketing-led IT expert. In truth, we only needed our PPC and customer success team members.

Second mistake: Chasing MRR

I had a huge gut feeling that we were not ready for MRR growth, but in January 2020, we gave it a shot anyway. We still had a few organic hits coming to the site from various sources, so we closed our lifetime deal (LTD) and switched on MRR. All we heard was crickets.

We were able to acquire tons of free signups, but hardly any paid users. MRR users are fundamentally different from LTD users. MRR users need a specific problem to be solved really efficiently before they decide to pay. They have various layers of objections while considering a new tool. LTD users, on the other hand, do not care about any of this. All they care about is getting a great deal for an attractive alternative tool with an ambitious roadmap.

Third mistake: Spending too much on ads

With such little MRR growth, we tried our best to scale using ads. They worked well for LTDs, so we figured that they would also translate to MRR growth. We spent around $50K, but only secured $2K MRR. At the time, there was a lack of accountability and direction between myself, my cofounder, and our head of marketing. We've recouped that money now, but at such an early stage, I wish we had been more careful.

Fourth mistake: Juggling too much

As the face of the company and visionary for our product, I was torn between community activities, marketing, product-building, and team management. I was spread way too thin! This hindered my critical thinking on product innovation, and limited my time to learn new skills. It also made me slip on making sure that my cofounder and I stayed accountable about how we were spending money.

Fifth mistake: Building new products without making the first a success

In February 2020, we decided to build another SaaS product. Although it made sense at the time, it was the worst decision we ever made. What we thought was only going cost us $10K ended up becoming a long-term project that ultimately cost us close to $70K over two years.

We tried to recoup the costs by launching a separate LTD, but such a utility product was never going to even come close to the revenue of a full suite design tool. In total, we probably generated $20K. In the end, this product turned out to be completely redundant technology, as so many different versions of it started making an appearance.

Sixth mistake: Not investing in the right UI/UX team

We brought on a UI/UX designer who had great ideas and clean design, but it turned out that none of it was scalable. He was not utilizing Figma's full capacity.

Since we didn't know any better, we worked with this designer for a year to get our second version out. Afterwards, we switched to a new UI/UX team that cleaned up our entire design ecosystem on Figma, and helped deliver our new features faster.

With a strong UI/UX design system and execution process, you can skip months of complicated dev handoff documents and ship a better product much faster!

Seventh mistake: Over-innovating for the sake of it

UI/UX is everything for a tech startup. Your product philosophy is what will help you win. What makes you different and unique is mostly your user experience. To get your product right, it's about identifying your unique value and leaning into it. User feedback is important, but remember that users are prone to shiny object syndrome. If you solely go by their demands, you will end up designing a Frankenstein product.

We wasted so much time and money on dead-end user experiences. Don't reinvent the wheel; just improve it, and only when it makes sense!

Discuss this story.

🐦 The Tweetmaster's Pick

by Tweetmaster Flex

I post the tweets indie hackers share the most. Here's today's pick:

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Special thanks to Jay Avery for editing this issue, to Gabriella Federico for the illustrations, and to Chris Monk, Priyanka Vazirani, James Fleischmann, Harry Dry, and Omar Farook for contributing posts. —Channing