I agree with everything you said here. Except I'd emphasize the trick is to keep it still being a "no-brainer because it's so cheap" decision even at higher pri

I agree with everything you said here. Except I'd emphasize the trick is to keep it still being a "no-brainer because it's so cheap" decision even at higher prices, by adding more value to the service as he goes (as you also said). Not necessarily with the same users, to be sure.