Why Free?

A vast number of companies initially offer their services for free. This is a great opportunity to allow users to get familiar with the product. Another clear benefit of this is that it reduces the initial friction with regard to getting access to a certain product. For example, if the service required payment, then it might deter a customer, whereas if it was offered for free, they might end up trying it out and then be able to form an opinion. This process is extremely common and is great for companies that are able to justify a paid version of the free or base product.

Conversions

After users are familiar with the service, they often times are often prompted to upgrade their plan in order to gain access to new features. For example, Spotify allows users to listen to music for free if they are willing to listen to ads in between. However, they recognized that uninterrupted music is extremely important for customers and can monetize that pain point. Figma is another great example of teasing their service. They allow users to use their service for free and get them to enjoy it until they realize how convenient it would be to be able to work alongside their teammates. Figma, realizing that this is a significant desire for their users, can hide this feature behind a paywall. The NY Times does a similar thing to Spotify. They allow their users to be able to have access to a limited number of articles, getting them to enjoy the service, but ultimately wanting more. It is vital that these companies choose the right balance between access, because offering too much might make the “upgrade” not worth it.