Don’t Make These 5 Mistakes In Your Freemium SaaS Application

Imagine you're ready with an innovative app idea for your business. You have strategized it to be an affordable SaaS application to ensure that customers can try what the app can offer. It sounds like a fully-proofed app to be successful, right? But what happens if you are stuck in the pitfalls of the common mistakes enterprises face.

This is why, in this blog, we have identified the most common mistakes enterprises commit in SaaS application development. Along with some crucial preventive measures to avoid them.

Freemium is one of the most popular SaaS (Software-as-a-service) models for all the right reasons. Many software applications today come with one or another version available as a SaaS application. If properly used, it has the potential to make your app the next major thing in your industry.

Most likely, you've experienced the freemium service while browsing your favourite applications--for instance, Netflix, Hulu, Dropbox, Splunk, Spotify and so on.

Yet, despite their popularity companies often face challenges to make it work because of some of the mistakes mentioned below.

What's the difference between HTML0 and a Freemium Strategy for an SaaS app?

A combination that combines "free" and "premium," this SaaS model utilizes a free version of a SaaS product to encourage a premium version. Users are able to access basic features for no cost and, for greater functionality users can sign up for subscription.

5 common mistakes to avoid when creating Your freemium SaaS application

Error #1: Not giving access to enough features that demonstrate the application's value

When unlocking features for you SaaS application, you should consider reducing not more. It is essential for your customers to understand the true potential and benefits of the SaaS application. You should give them an understanding of how your SaaS application can benefit them or their business. The customer experience and customer satisfaction are mostly built on the free version of your application. If your value proposition for your free app is not strong, the customers won't move to premium.

What is the reason for not attracting new customers or users with using the trial version? The reason is that the features you offer don't seem compelling enough. Imagine this way, if your SaaS app has 20 features and you're choosing 5 features for free access. These five attributes should be compelling enough to convince people to buy the additional 15 features according to what you charge for SaaS pricing.

What is the best way to define free? This is the question which you need to address as a SaaS company when it comes to pricing strategy.

Second error: Giving access to the majority of features, so there's not much incentive to buy

This is a different mistake from the previous one. It brings you back to the question we asked you to look at which of the following should be free? This is a fundamental issue that is tied to your SaaS app development.

You should save the richest aspects of your SaaS functions for customers who are paying premium. If you're getting large amounts of traffic however, only a few are upgrading to premiumfeatures, then you need to lower the price of your top features. The cost ratio shouldn't affect the revenue of your business.

One instance of error is the New York Times. In the beginning, they offered unlimited access to the newspaper its subscribers. In 2011, however they restricted publication to 20 free articles per month for each user. Users had to subscribe to get access to more. Over the months the team realized that they were giving more than they could to users. Because very few users subscribed. Finally, in 2012 the company cut the amount of free articles to 10 per month.

The third error not viewing Free users like customers

Another mistake that SaaS enterprise companies make is not communicating the advantages of their premium product to their free users. They don't view free customers as customers , and do not give consideration to them. According to a study by Harvard Business School that a user who is free is typically worth 15% to 25% as much as a paid customer. If your customers do not understand and grasp the full potential of the product, your conversion rates are likely to be low.

Insufficient support for the users of your application will end up impacting the overall customer experience. Support you offer to the free users within the SaaS application will be beneficial in the end. You should clearly explain the distinctions between premium and free offerings and also define the model of freemium pricing.

Additionally the SaaS application development needs to be able to handle the two sets of features, simple and more advanced. And make clear distinctions in both sets of features, so that it is evident to the users.

Mistake #4: Not being committed to innovation

Your freemium SaaS application is not just an effective tool to acquire customers. Often enterprises make the mistake of eliminating it when new customers are not getting as much traffic. Then, the customer onboarding rate decreases. It is essential to enhance its value for your SaaS application with constant innovations and adjust the price of freemium as such. Freemium SaaS application opens up new opportunities for innovation and to address user issues and problems consistently.

Dropbox is an excellent illustration of such continuous innovation. It was launched in 2008 primarily providing the service of backing up files. In the end, they began offering shared folders that made Dropbox an effective collaboration tool. Later, additional features came in like automatic syncing for smartphones and other devices, automated uploading of pictures and other. In time, the overall SaaS application was upgraded and delivered more value than they initially began with.

Mistake #5: Not understanding target conversion rate

With a freemium SaaS application, you may make the mistake of not knowing the significance on your rate of conversion. What should be your goal conversion rate? This is an important aspect to be considered in order to increase the revenues of your SaaS application.

If your conversion rate is as low as one percent, you're freemium SaaS marketing strategy isn't performing for you. It might be because you are giving too much for free or is it of no worth to customers to upgrade.

A high conversion rate does not necessarily translate into the success of your SaaS app. Remember, this freemium SaaS model is designed to attract large volumes of traffic. So, in that case it is important to concentrate more on increasing the number of overall users rather than just the conversion rate. For instance, 5% of 1 million monthly users are more beneficial for your SaaS app's revenue as compared to 50% of 100,000 visitors.

Hence, a moderate conversion rate with a high volume of traffic is perfect to use for the SaaS freemium model.

Best Practices for SaaS application development

For an effective SaaS application development, implement some of the most effective practices for SaaS application development that are described in the following paragraphs:

1. Be aware of the requirements and concerns of your users

2. Aim for self-service and personalization within your SaaS application

3. You can be sure of seamless and simple integration

4. Pick the right cloud provider for your needs.

5. Make sure you have high standards for security and conformity

6. Monitor performance and fix problems

7. Opt for Multi-tenancy architecture

8. Prioritize and optimize features

In recent years the freemium model used for SaaS application development has gained more and more attraction from SaaS businesses. Software-as-a-Service is a go-to approach for enterprises who want to mitigate to the cloud. In essence, SaaS application development cut the cost of infrastructure. Additionally they give access to an unending selection of software.

A growing number of businesses are moving to a freemium-based model for its SaaS applications. However, implementing it successfully requires understanding and familiarity with frequent mistakes that are easily avoided. When you are developing your freemium SaaS implication, it is essential to think ahead and not lose sight of your goals for the long term. The first choices you make in your process of development will determine the viability of your product or application.

Find out more about our precise SaaS development methods and solutions that we have curated especially for you in this article.

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