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I'm working on a b2b marketplace that is completely free as of yet but I'd like, in the near future, to give users the option of purchasing a premium account of some sort. What I want to know here is, which is better from the user experience standpoint, adding restrictions or adding options? It does sounds trivial, but it's really not.

  • By adding restrictions to things that were free in the past (e.g. attach 2 documents max. to a product description, when the max. used to be 5) the users would be driven to purchase a premium account to regain the option they used to know and be used to. But, at the same time, it's unfair to give an option and then remove it and ask money for it. It might have the opposite effect and piss some users off.

  • By adding options, users would be driven to puchase a premium account to gain those options. But, if they've never use them, there's a good chance they "don't know what they're missing" in the sense that those options are not a necessity to them, and they would probably not be driven to purchase an account to have it.

So, which is better?

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2 Answers

up vote 3 down vote accepted

I recommend reading this excellent case study of how Evernote got its customers to pay for its service which was initally free. To quote the article

But according to one hugely successful startup which operates under the Freemium model, Evernote, converting free to paid is all about engagement.

"The easiest way to get a million people to pay for non-scarcity product may be to make 100 million people fall in love with it,” Phil Libin, the CEO of Evernote told the Founder Conference. His users, says Libin, are his marketing team.

The key to getting that number higher is to keep users (aka fans) happy. “It’s more important that you stay than you pay,” Libin said. “Once Evernote gets under your skin, you never want to stop using it.”

Also user research has shown that when users are aware of what a product is capable of doing and when the available features add value to the product they are more likely to be willing to pay for it as soon as they get used to it and find out that they cant exist with out it. To quote another study about a social media sharing app called Buffer

Lesson 1: User Flows Should Focus on Retention, Not Revenue

A key user experience (UX) lesson that we discovered early on was that we needed to concentrate on keeping our customers rather than generating revenue.

This is how we learned this lesson. Our initial landing page’s user flow was as follows:

  1. When you first see our landing page and click on the sign-up button, we would show you a "subscription plans and pricing" page.
  2. From there, you would be required to choose either the "Free" plan or one of our paid plans.
  3. After you’ve picked the right plan for you, you would be able to sign up by providing your details (e.g., your name, email address, and so forth).

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With this user flow, the rate of people choosing one of the paid plans upon signing up is high, thus allowing us to generate revenue early on.

However, we quickly learned that users who picked to pay for the product before getting the chance to use it sent our churn rate through the roof.

Why did this happen?

We found out that people would pay, but then they wouldn’t even start to use Buffer, and eventually they’d cancel their subscription.

So we changed our sign-up user flow and philosophy of acquiring users. We decided to say to ourselves, "Let’s get the person to start using the product first so that they can experience first-hand the value of our product, which will hopefully encourage them to upgrade to one of the paid subscription plans."

That worked out a lot better for us.

As a result of this user flow redesign, two important things happened:

  1. More people signed up because we didn’t dilute the funnel with a pricing page as an interstitial.
  2. More people upgraded over time because they started to actually use the product, find value in it, and stick with us. Since then, we’ve made many more product changes that give out more free features, and our core product features are still free. Only after we’re sure you’ve really seen lots of value from using Buffer that we would encourage you to upgrade to a paid plan.

Making user flows that focus on user-retention was an important discovery for us.

Hence my recommendation would be the following :

  1. Inform your users in advance that you will be migrating to a paid model soon and when so that they know when to expect it and are not surprised
  2. Inform them of what will be available in the free version but also emphasize on the benefits of the premium version.
  3. Consider the concept of a trial before you buy for new users so that they know what they are getting.(500px does this brilliantly where it signs you directly for the full fledged trial option and allows you to get used to the benefits).

I also recommend reading this UX Myth article : People are rational for additional inputs.

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Very good information! Surprising that both accounts emphasize the importance of keeping the costumers rather than getting them to pay for the service. I'll probably give all accounts a trial version and informing them that it will be switched back to the basic version –  fedeetz Mar 6 '13 at 19:21
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I'd say giving more options is a better way. By this you tell to the users that actually what you offer them extends, and this triggers better perception of what you offer them.

However, there are also downsides of this approach, especially when you offer too much at the beginning. If you do, most users may find the basic version satisfactory enough, so they won't be interested in extending it.

Fortunately, there is a way between - a trial period. You can communicate to the users that there are two levels of membership and thus also features. For some time they are given the extra features for free, but with time, if they don't pay, their accounts are going to switch to basic, and the features are going to be limited. This model is used quite often.

By the way, I think that this question refers also to digital strategy (maybe even more than to UX itself).

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Thanks for the reply! Yeah, I'll probably go for the trial period approach, it seems like the best option. Also, yes, StackExchange should have a Digital Strategy Q&A site, UX is the closest place I found to ask this question –  fedeetz Mar 6 '13 at 19:25
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