5 ms·

The thing that annoys me is the standard operating procedure in tech is to offer stuff for free until a bunch of people depend on it and then to start charging

The thing that annoys me is the standard operating procedure in tech is to offer stuff for free until a bunch of people depend on it and then to start charging as much as you possibly can once there's a large enough customer base that a reasonable percentage won't have any choice but to bear the updated costs. Mailgun did a pretty nice job by offering a pay-as-you-go tier, but they still took features from the free plan and moved them into a paid tier where you have to spend a minimum of $420 per year. I use Mailgun for less than 100 emails per month, but happen to use the receive filtering that's not going to be available with pay-as-you-go. I don't expect them to give me anything for free, but I'm not going to pay $420 / year for something that costs $.72 using your estimates.

akira2501 7y ago
> The thing that annoys me is the standard operating procedure in tech is to offer stuff for free until a bunch of people depend on it and then to start charging as much as you possibly can [...] Maybe someone more knowledgeable can help me.. but from a laymans point of view, how is this different from the practice of "dumping?" Shouldn't the FTC be more active in protecting markets from this type of strategy?
- ttul 7y ago
  It’s not anticompetitive to offer a freemium product, unless your market position is so powerful (Microsoft vs Netscape late 1990s) that competitors cannot also afford the same giveaway.
  - alharith 7y ago
    With the consolidation of resources into Big Tech, this is quickly becoming the reality across all domains. I imagine that they will always keep cloud computing costs juuuust low enough to have plausible deniability in a court case, but still.
dumbfoundded 7y ago
I don't know if emailing them would help, but I'd try it. They probably have a system to grandfather people in, who reach out. I would hope.
- webbie917 7y ago
  ^^^ I agree with this. There is a very good chance that anyone who bothers to reach out to support and explain their case can get grandfathered.
webbie917 7y ago
It really has become a norm and is very frustrating for customers, while there is simply a better way to do this - kill free plan for NEW customers, but grandfather existing customers. Or at least introduce some break-even (low profit margin) plan/tier to move existing customers to, no need to force them off the platform completely. Yes, spammers are a big issue for all ESPs (my own biz in this space is no exception), but no need to throw the baby out with the bath water.
- seibelj 7y ago
  Why? It's their business. You didn't sign a contract saying "free for life". It's sad, but there is no free lunch, and you shouldn't build your own business off the assumption that some resource will be free forever.
  - donmcronald 7y ago
    Free tiers are just another type of market research where the company is collecting data to determine the stickiest features. $8 (or less) per month to keep using the feature with competition (sending). $35 a month to keep using the feature without competition (receive filtering and forwarding). Is that a coincidence?
    - chiefalchemist 7y ago
      Features and bugs. The free tier is closer to unpaid beta testers, except the free tier comes with minimal support.
- manigandham 7y ago
  How are they being forced off? Their plans are low profit already, and if customers are getting value then it's fair to ask for payment, even if it was free until now.
- disillusioned 7y ago
  What value are they getting out of carrying a bunch of freeloading accounts? Or put another way: what value are they risking by force-deplatforming the freeloading accounts, besides a bit of splashback from frustrated (non-paying) users?
smoyer 7y ago
I'd love to have a business (of any sort) with customer lock-in ... sadly none of my start-ups have ever achieved that position.
deleted 7y ago
[deleted]
codingmess 7y ago
"offer stuff for free until a bunch of people depend on it" Nobody can really be surprised by that, though? Meaning people who sign up are aware that it could happen eventually?
- jwr 7y ago
  Sustainable self-funded SaaS founder here. Everybody should realize that: * there is no free lunch * a VC-funded business is looking to maximize user base and then get sold, so as a customer you are likely looking at a time horizon of ~3-4 years: plan accordingly * if a niche B2B SaaS offers pricing below $40/month, it's not sustainable and will disappear, so plan accordingly * if anybody offers you stuff for free, something is wrong, so take advantage at your own peril But most people do not realize all that, and expect things to be free forever, pay for software once, or for complex B2B applications to be available forever at $5-$19/month.
  - donmcronald 7y ago
    I get how it works. I just dislike it. Did you have to compete against any VC funded companies? My biggest issue with the whole model is that by offering a free tier or by subsidizing everything for "~3-4 years" the VC funded companies make it difficult for anyone to build a business that charges fair value from day 1. It's hard to deal with because so many people are choosing the "free" option that if you try to pick something that charges fair value, you could end up picking a losing side. Or, even worse, there aren't any alternatives and you get to choose between dying on a hill or running to the slaughterhouse along with the rest of the herd. Look as Visual Studio Code vs Visual Studio Online. Watch as VSO slowly gets more features than VSC. It'll happen slowly, and intentionally, but VSO will eventually be significantly better than VSC. Then start to think about the integration MS can do with GitHub and Azure to streamline the development process and you get to the point where everything else is an inferior product. Now we're paying $1k+ per year for a code editor that used to be "free". Right now it's possible to sacrifice time in place of money for almost everything, but I'm worried we'll hit a point where a lot of the development process has been usurped by SaaS offerings and the only way to play will be to pay.
exolymph 7y ago
The very obvious takeaway is to not expect free services to be available indefinitely.
smaryjerry 7y ago
Note his estimates were for revenue less cost of goods sold. So that doesn't cover any labor, interest, taxes, etc.

akira2501 7y ago

> The thing that annoys me is the standard operating procedure in tech is to offer stuff for free until a bunch of people depend on it and then to start charging as much as you possibly can [...] Maybe someone more knowledgeable can help me.. but from a laymans point of view, how is this different from the practice of "dumping?" Shouldn't the FTC be more active in protecting markets from this type of strategy?

ttul 7y ago
It’s not anticompetitive to offer a freemium product, unless your market position is so powerful (Microsoft vs Netscape late 1990s) that competitors cannot also afford the same giveaway.
- alharith 7y ago
  With the consolidation of resources into Big Tech, this is quickly becoming the reality across all domains. I imagine that they will always keep cloud computing costs juuuust low enough to have plausible deniability in a court case, but still.

dumbfoundded 7y ago

I don't know if emailing them would help, but I'd try it. They probably have a system to grandfather people in, who reach out. I would hope.

webbie917 7y ago
^^^ I agree with this. There is a very good chance that anyone who bothers to reach out to support and explain their case can get grandfathered.

webbie917 7y ago

It really has become a norm and is very frustrating for customers, while there is simply a better way to do this - kill free plan for NEW customers, but grandfather existing customers. Or at least introduce some break-even (low profit margin) plan/tier to move existing customers to, no need to force them off the platform completely. Yes, spammers are a big issue for all ESPs (my own biz in this space is no exception), but no need to throw the baby out with the bath water.

seibelj 7y ago
Why? It's their business. You didn't sign a contract saying "free for life". It's sad, but there is no free lunch, and you shouldn't build your own business off the assumption that some resource will be free forever.
- donmcronald 7y ago
  Free tiers are just another type of market research where the company is collecting data to determine the stickiest features. $8 (or less) per month to keep using the feature with competition (sending). $35 a month to keep using the feature without competition (receive filtering and forwarding). Is that a coincidence?
  - chiefalchemist 7y ago
    Features and bugs. The free tier is closer to unpaid beta testers, except the free tier comes with minimal support.
manigandham 7y ago
How are they being forced off? Their plans are low profit already, and if customers are getting value then it's fair to ask for payment, even if it was free until now.
disillusioned 7y ago
What value are they getting out of carrying a bunch of freeloading accounts? Or put another way: what value are they risking by force-deplatforming the freeloading accounts, besides a bit of splashback from frustrated (non-paying) users?

smoyer 7y ago

I'd love to have a business (of any sort) with customer lock-in ... sadly none of my start-ups have ever achieved that position.

deleted 7y ago

[deleted]

codingmess 7y ago

"offer stuff for free until a bunch of people depend on it" Nobody can really be surprised by that, though? Meaning people who sign up are aware that it could happen eventually?

jwr 7y ago
Sustainable self-funded SaaS founder here. Everybody should realize that: * there is no free lunch * a VC-funded business is looking to maximize user base and then get sold, so as a customer you are likely looking at a time horizon of ~3-4 years: plan accordingly * if a niche B2B SaaS offers pricing below $40/month, it's not sustainable and will disappear, so plan accordingly * if anybody offers you stuff for free, something is wrong, so take advantage at your own peril But most people do not realize all that, and expect things to be free forever, pay for software once, or for complex B2B applications to be available forever at $5-$19/month.
- donmcronald 7y ago
  I get how it works. I just dislike it. Did you have to compete against any VC funded companies? My biggest issue with the whole model is that by offering a free tier or by subsidizing everything for "~3-4 years" the VC funded companies make it difficult for anyone to build a business that charges fair value from day 1. It's hard to deal with because so many people are choosing the "free" option that if you try to pick something that charges fair value, you could end up picking a losing side. Or, even worse, there aren't any alternatives and you get to choose between dying on a hill or running to the slaughterhouse along with the rest of the herd. Look as Visual Studio Code vs Visual Studio Online. Watch as VSO slowly gets more features than VSC. It'll happen slowly, and intentionally, but VSO will eventually be significantly better than VSC. Then start to think about the integration MS can do with GitHub and Azure to streamline the development process and you get to the point where everything else is an inferior product. Now we're paying $1k+ per year for a code editor that used to be "free". Right now it's possible to sacrifice time in place of money for almost everything, but I'm worried we'll hit a point where a lot of the development process has been usurped by SaaS offerings and the only way to play will be to pay.

exolymph 7y ago

The very obvious takeaway is to not expect free services to be available indefinitely.

smaryjerry 7y ago

Note his estimates were for revenue less cost of goods sold. So that doesn't cover any labor, interest, taxes, etc.