Lessons learned — Going freemium with Noah Bragg of Potion

This week I'm starting a new series called Lessons Learned, where I interview successful indie hackers, SaaS makers, startup founders, and solopreneurs on what they've learned building, launching, and growing a SaaS.

No matter what you call yourself, you'll find something to learn.

But first, I need your feedback

This is the 8th issue of this newsletter. I'd love to hear your feedback. Drop me a line on Twitter or bryan@productfoundry.co and let me know what you think, what you'd like to hear more of, see less of, etc.

Thanks!

🔹This week's insight — Marketing > Building

(I lied, I started three new things with the ProductFoundry this week, and this section is one of them.)

I'm building a guide and a directory called The SaaS Ready Guide and the SaaS Ready Directory (this is the 3rd thing, it's barely started, but check it out). I want to draw attention to all the building blocks it takes to launch and grow SaaS.

Think of it as a cheat sheet.

To kick things off, I'm building out a directory of SaaS built for other SaaS. Everything from payments to onboarding.

Here's the thing.

I've now looked into over 100 SaaS offerings. I've found them on ProductHunt, Reddit, HackerNews, Twitter, and more.

Of those 100. Only about 30 still exist. Ouch.

These were promising-looking SaaS that solved real problems. Why don't they still exist? There are probably lots of reasons.

Here's this week's insight ➡️ Many builders only build. They identify a real problem and create a great solution. But they never learn how to sustainably reach an audience. They only build technology, and they never build a marketing funnel.

The takeaway is obvious. If you're coming at this as a technologist. Learn how to market as much as you learn how to build. Otherwise, your good product will probably fail.

🔹Lessons Learned going Freemium

Last week I spoke with Noah Bragg about his startup Potion and what he learned by going Freemium.

About Potion

Noah started Potion about two and a half years ago. It's a service that can publish any Notion space as a website. It's a handy service for building blogs, landing pages, portfolios, help docs, and more.

Initial focus on product market fit

Until nine months ago, Potion required a credit card to access a trail. Noah's reasoning was simple. It's generally what other bootstrappers said was a good way to go.

Early on, seeking validation, he wanted to avoid dealing with free users and instead focused on driving enough value into his product to get people to pay.

Noah smartly optimized for what would get him product market fit.

Lesson 1️⃣ — The only real validation for a SaaS product you can have is people's willingness to pay with money. Going freemium too early can potentially distract you with false confirmation. Or it can distract you with supporting free users when you need to be focusing on what paid users want.

Going freemium

Noah's interest in going to a freemium model started by seeing what others were doing and considering its impact on his business.

Freemium can drive considerable growth. For some freemium plans, there can be a viral factor. With a "Built by Notion" banner, Noah hoped to see more people become aware of Potion and enter the top of his marketing funnel.

Lesson 2️⃣ — For some products, freemium can be a marketing channel. 'Powered by' banners show off your value and can help others become aware of your product and brand.

Worries going freemium — Cost & Support

One of Noah's biggest worries about freemium is one that most bootstrappers worry about. Can I support a massive influx of users?

If I get 10,000 users using the free plan, can I even support it?

For Noah, he realized he had to optimize his infrastructure before he could successfully offer a free plan. Early on, he had run into scaling issues and had paid down that technical debt.

But there was another tactic Noah realized he had going for him.

The largest support issue he gets is around DNS questions. For many, DNS is something few people think about frequently. As a prosumer product, Potion's users were even less likely to deal with DNS often.

This was not an issue for Noah, as his free plan doesn't offer using your own domain. All the sites are sub-domains on Potion.so.

Problem solved.

Lesson 3️⃣ — Be smart, figure out where you're most likely to run into support issues or other significant costs, and plan or engineer around them.

Since Noah had already paid down infrastructure tech debt, free users would negligibly impact his bottom line. And by making custom domains a premium feature, he moved his biggest support issue to paying customers only.

Success with Freemium

Before offering a free plan, Noah got about 30 users a week trying out Potion. But within a week, that number went up to 200 a week.

All because of the free plan.

Which only took a week to build.

His strategy was to add freemium, and if it negatively impacted the business, he could roll it back. Only costing him a week of effort.

Lesson 4️⃣ — Make your experiments quick and easy to roll back.

To Noah's surprise, his support load never changed at all. It turns out prosumers are used to self-service products, and their expectations were aligned with his offering.

Lesson 5️⃣ — Know your customers. Will they tolerate a low-touch model? Or do they require a high-touch approach? If so, consider if your freemium business model will support this.

Does freemium == 🚀?

Free plans do not guarantee a viral rocketship. Noah's 'Built with Potion' banner has been seen by users but isn't guaranteed viral growth.

He shared that 890 people have clicked the banner, leading to 10 conversions.

Lesson 6️⃣ — Be sure to build in a way to be discovered, like a banner, but don't build your business model expecting viral growth.

So has it paid off?

For Potion, the real value of a free plan has been people's willingness to try it risk-free.

Allowing Noah to focus on optimizing his free-to-paid conversion.

For many SaaS, Noah shared that conversion from trial to paid is 30-40%. For Freemium, conversion is lower. His is now 4%.

However, that's far offset by the increase in users willing to try Potion each week.

Lesson 7️⃣ — Free plans can lower the barrier to entry for users. But if you do so, you need to be sure you don't give too much value away for free, so enough users are willing to convert to a paid plan. Focus on conversion tactics like drop campaigns is required for success.

Any surprises?

Noah was worried that he had made a mistake in the first month. With a longer trial window, his conversions looked far worse.

But Noah quickly saw that users were building their site fully, learning Potion over a couple of weeks before converting.

This lower-risk, higher-impact trial has paid dividends for Potion.

Users get more value early on, moving the activation point out further but allowing Noah to forecast more accurately if they will convert.

One tactic Noah used was a drip campaign over a couple of weeks. An email goes out to the new user every few days, prompting them to the next step. If someone gets stuck at a stage too long, he has other emails to help nudge them forward.

Lesson 🎱 — Be patient and pay attention to what your activation funnel looks like. Changes will likely need to be made.

Has it been worth it?

Overall going to a freemium model has paid off for Potion. Some areas Noah highlighted were:

• Increase in top-of-funnel activity - more people getting into the product is better
• Which increases trials
• Which increases growth
• And ended up having less support than expected

Given all this, I had to ask, knowing what he knows now, would he have gone to a freemium model sooner?

Looking back, I probably should have tried to hit the free plan earlier on, just from the benefits I've seen from it. It would have forced me to address some changes sooner, but it would have been worth it.