I have an existing site that has been running for a couple of years as a free service. It started out as a hobby but now I have my own startup, it is coming under that umbrella and substantial enhancements and new features will be added. The plan is to charge for certain features.
Most of the existing features will continue to be free and I'm thinking that for those people who already have an account, the existing features that will be charged for, will remain free for existing users. In other words, I will have a grandfather plan for existing heavy users so they won't have to start paying for what they are currently getting free.
Does this sound like a good approach?
Another concern I have is how to best add incremental features that will only be available in the paid plan. I'm worried that the incremental introduction will mean the paid accounts will be a little lightweight in features at the beginning. But I don't want to introduce new features free only to later make them paid.
With the incremental changes you have two options:
Have the new features available free to your existing users for a 'limited time'. This may help with attracting them to pay for the features when the trial runs out. By that time you could have a significant number of features available which would justify adding a new paid account and won't be so lightweight.
This will obviously depend on your current timeline, you don't want a free for a limited time offer that lasts 2 years.
The other benefit of this method is you will have some existing heavy users who can give your new features a workout and will be more tolerant towards bugs in new features if they are not paying for them.
The other option is just go ahead and advertise the paid account even if it is lightweight, let your customer decide if it is worth paying for.
I am also wondering if you have thought through your 'grandfather plan'. If there are existing heavy users, what benefit are you getting from them that you would allow them to continue to use your site (which is essentially your time, money and ideas) for free and over and above the regular user who has a free account?
this whole "freemium" vs pay for service has been a hot topic in investor circles for a while now. Both sides have good arguments but it seems unless a line is drawn for SaaS pay model then one doesn't truly know what client retention rates will be.
In your scenario you are not explaining what percentage of your total client base you will seek to "grandfather" in. If it is 1-2% ok I see your point. For us, we saw "freemium" as counterproductive as it is difficult to take a client that is accustomed to getting all the bells and whistles for free and tell then they must now pay.
For us it bacame a fork in the road. We re-adressed and re-entered the market with a pay only model and sure we lost some users but now the ones we have take our product much more seriously and believe me no sounding board needed, they will let you know of what they want when they pay for it without us formerly having to chase for input.
Without more detail from you another option could be the tiered membership level. some basic stuff free but if you want this service or that it one will have to become a "platinum member" so to speak for a monthly access fee. Do yourself a favor and bill quarterly at minimum on that one. Anyway I hope this was some help to you and best of luck!
Something you should ask yourself is the service I'm offering creating a network effect meaning the more users, even if free, the more valuable my serivce. If this isn't true the going free route for a service does nothing but add cost to your business. So the reason to have a period of time when something is free or a limited addition is to get customers to try it out. Perhaps just have a limited time trial or a limit to use per month unless paying.