Going Paywalled in B2B SaaS

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Freemium is a business model where you offer a basic version of a product for free and charge for certain features (i.e. more users, more data, …). On the web, this is a very popular business model for online services. In 2008 Nimonik was spun out of EEM with the explicit aim of rebuilding the environmental legislative tracking tool and changing the business model. A core part of our ambition was to go from a static enterprise model to a freemium software as a service (SaaS), allowing us to target more manufacturing and industrial clients and help them manage their environmental legal obligations. In late 2008, we did just that, launching version 2.0 of Nimonik's software.

Four years later, we have learned a lot from our mistakes and our successes. We have seen who buys the software, who sticks with it and which features make sense for busy EHS managers. We are far from done, the software can still be improved a lot, sped up and made easier to use – but one thing we have learned is that free does not work (in B2B).

While the intent was well intentioned: give users a taste of the system for free and hope they would upgrade, we have found that over 90% of our paying clients are clients who started paying from the start and never tried the free version. To further test this experience on the web, we tried multiple models for our iPad app.

With our iPad app, EHS Audit Tool, we experimented with the pricing model. So far we have tried:

  • a free app,
  • a free app with in-app purchases,
  • a low cost app with in-app purchases, and
  • a paid app with a large ticket price ($30).

Of course, what works in the short term does not necessarily work in the long term, but one clear trend emerged: users who spend 30$ on the app are serious users. A couple weeks ago, we ran a promotion and offered the app for free for one day, during which we had over 900 downloads around the world. Of those downloads, no one upgraded to a paying subscription. That does not mean they never will and it could be linked to multiple factors, but we have found usage after a week from date of purchase from users who got a free app to be next to nil compared to paid users.

So, what have we learned in our four years of pricing model attempts? It's hard to say. However, it is becoming clear that if you wish to identify serious potential clients in the B2B market, freemium is quite possibly not the way to go. That is why, going forward we are asking our users to provide credit card information when creating an account. We still offer free accounts, that stay free forever, but now we ask users show they are serious about trying out our software. User signups are down significantly since this implementation, but the free users we had never upgraded anyways, so what are we losing? We have less support to deal due to less users and the people who do signup for a free account are serious about finding a solution to tracking environmental, health and safety regulations and auditing on iPad and iPhone.

We'll keep you posted as we move forward.