Do I need to offer a free version to sell my SaaS?

I have a software as a service model for content management system.

What I'm wondering is do I have to have a free version tier in order to sell it? Meaning do I need to have some threshold of use so its just enough to sample it and use it but not enough for the real world? I'm not sure if that is the best idea because of it using a CDN to serve content. I have to pay for the CDN content for each free account and I would definitely lose money if there wasn't enough users actually paying for it. What should I do for any who have experience with this sort of thing? Also, if you have any further advice about getting it noticed or VC or angel stuff, I'm all ears. Basically anything you have to say I will listen to at this point so thanks for any feedback in advance.

Up until 2 months ago I had a freemium option for my SaaS. I was getting over 1000 free account signups a month and less than 20 paid signups. I then happened to re-read http://www.softwarebyrob.com/2010/08/18/why-free-plans-dont-work/ and decided to can free accounts. My paid account signups have jumped five fold in the two subsequent months.

Every service will be different but you can always try turning off free accounts for a month or two and see what happens. If your paid signups go up leave them off otherwise turn them back on.

Your 30 day trial is adequate for right now. Rather than going back and hack up your solid product to make a stripped down crappier version of it, think of something that you can offer for free that gives away just enough value to get past the friction of signing up, but does not cannibalize your paid subscriptions. It doesn't even have to be a CMS, it can just be a little stand alone module that just happens to work well with your CMS.

37 signals has a book called rework that talks about this. Their free offering is basically 1 tiny component that in and of itself is useful, but does not solve the problem that their paid offerings do. For your CMS, think of how you can give away a freebie that gives people value but does not adequately solve the problem that your paid offering solves.

Always give something free. Its so important to get a user base. Look at some other companies.. Logmein in such a great example. Their free service, everyone uses right? They make it so easy to just push a "buy" button next to their Pro version and other products. Works like a dream in my opinion.

A free version of your software is like free advertise. If people use it (period), they will tweet about it or write blogs. Only less people write about 30-day trial software imho.

In addition, you build up trust with a free version. People can see how good/bad you are and then trust you when buying the pro version. They know basically what they can expect.

After all you can learn about your users behavior and get valued feedback on the free version, which sometimes will give you ideas on pro versions.

And last but not least, people are more like to buy at your site when they are already using it for a good while.

Freemium doesn't make sense for your particular product. Your primarily selling to businesses (B2B) and businesses have money to spend (in theory). Secondly, usage of your service creates a dependency on it making it difficult for the user to cancel or migrate out once they gain traction with your product (i.e. have a lot of content served to a lot of sites). Would you rather have a user tied to your service for free or as a paying customer? In contrast, freemium with LogMeIn makes sense. I as a consumer can leave their service for a competitor no strings attached.

As far as gaining attention with VC/investors try AngelList. Also try joining the OnStartups group on LinkedIn and participate in discussions.

What we've learned at our startup with testing.

• Shorter, free trials, work better than longer ones. Try 14 or even 7 day trials of fully featured accounts.
• Not requiring a credit card for a free trial increased our paid conversion rate.
• Using branding to advertise our service on free accounts (We sell landing pages) is responsible for about 30% of our paid service growth each month. The freeloaders provide us with advertising.
• In the end having the trial converted only as well as having the limited free account ala 37 Signals. So we killed the trial and replaced it with the limited/advertising enabled/ free account.