The freemium fallacy: data from two years of user behavior

Hey Huzzler community!

After running two B2B products with freemium models for 2+ years, I made a counterintuitive decision: I eliminated free plans from one of them. Here's what the data showed me.

The numbers that changed my mind

QR code analytics product:

• 600 monthly active free users
• Less than 10 paying customers
• 0% of paying customers started with free plans

Employee time tracking service:

• 80% of users stayed free for 2+ years despite daily usage
• When I removed free plans, only 1 person provided testimonials to keep free access
• The rest preferred to abandon the service rather than pay €6-10/month

The hidden costs I didn't expect

Free users weren't just non-converting, they were resource-heavy:

• Constant support tickets for features they'd never pay for
• Hours spent helping with setup (custom domains, DNS configuration)
• Server costs and infrastructure scaling with no revenue contribution

The opportunity cost hit hardest. Time helping free users = time not spent on paying customers.

What I learned about customer types

My paying customers shared one trait: they paid immediately.

No free trial period, no gradual conversion. They saw value and whipped out credit cards on day one.

Free users wanted "tools" (something that should be free). Paying customers wanted "services" (something worth paying for). The language difference revealed everything about their mindset.

When freemium still makes sense

I kept free plans for the QR analytics product because:

• It's SEO-driven with natural viral sharing
• Users create QR codes, others scan = organic exposure
• Marketing tools benefit from word-of-mouth

I removed them from the time tracking service because:

• B2B productivity tools don't get shared socially
• Target customers have software budgets
• No network effects from free users

The results

After going paid-only:

• Support tickets dropped 90%
• Infrastructure costs decreased
• All conversations became business-focused
• Total users decreased significantly
• Customer quality improved dramatically

Key takeaway

Freemium isn't universally good or bad, it depends on your market. For B2B products targeting businesses with existing software budgets, paid-only can work better than expected.

Sometimes, the best growth strategy is saying no to users who aren't ready to pay, allowing you to focus on those who truly value your work.

I made a full post of my experience on Medium.