How to convert free users to paid customers

Offering a free level of product or service is a good way to get people involved in your business. But how do you then move them from free to paid? I’ve written before about a business who did it well, so let’s now look at one that, in my eyes, got it wrong. 

Winding back what you’ve given away

A web service that I have been using recently advised subscribers that their free plan was changing. In the words of the chief executive; “We’re pulling back many of the features available in the free version and imposing some of the standard limits that other free products have.”

The reason? “Unfortunately, by offering such a robust free product, we devalue ourselves more than a little and divert resources from the advancement of our product.”

I completely understand their conundrum. To attract customers they’ve provided a great service, but the service has been so good that customers see no reason to start paying. They’ve given too much away. 

Presenting the offer

After introducing the change, the web service presented customers with two options: Move to the (significantly constricted) new free plan or pay $300. Whoa! That’s quite a jump, and I think their conversion will be (a) pretty dismal and, for those who do move across, (b) done very reluctantly.

Figure 1: Free vs paid offer

How to improve the odds of conversion

Here are a few behavioural techniques this business could have applied to improve their chances of conversion. The business could have:

• Used a monthly (or weekly) price to make it seem less expensive. After all, $25/month seems a whole lot more palatable than $300 for the year.
• Reduced the prominence of the price, including using a smaller font size and folding it into the text so it would be contextualised by benefits.
• Included a “sweetener” offer, so listing the “Basic Plan” RRP as $400 but marking it down to $300 for a limited time for instance (also known as anchoring).
• Included a less expensive “basic plan” that was priced somewhere between $0 and $300, rebranding the current basic as “standard” and presenting three options instead of two.
• Used a table display to compare the two options, making the free plan look unattractive. The following image, for example is based on a real-life software company. Note how ticks and crosses can be used to make the free option feel like the weaker choice.

Figure 2: Using tension to drive paid conversion

Guidelines for converting free to paid services

From this example, it’s important to remember:

• Don’t give too much away in the first place.
• Make something about your free version a bit painful (e.g. ads appear), so the proposition to pay relates to having that pain go away (e.g. ads removed).
• Build tension by illustrating the benefits of paid and disadvantages of free.
• Minimise the perceived cost by framing the price using price anchors (e.g. RRP and mark down), monthly rather than annual values and displaying the price in a more discreet typeface and position.

Bri Williams deletes all buying hesitation and maximises every dollar of your marketing spend by applying behavioural economics to the patterns of buying behaviour. More at www.briwilliams.com.au.