When shall your startup begin with paid plans?

Should we continue investing in app maintenance and development, extending its features, waiting to get traction (and potentially - risking going bankrupt)? Or maybe we should start paid plans right from the day one and risking that your users will not be prone to pay for accessing the new app that they don’t know much about, that may eventually also end up not well? Which of these two approaches is better? Let’s look at the pros and cons of both.

Focusing on traction

The first approach assumes that in the startup’s early life, the most critical is not the revenue, but rather the app’ users. Obviously, the new unknown venues might be struggling with how to get traction and since it’s difficult to get new users, attracting a user that is willing to pay is even more tricky. 

Startupers are frequently reluctant to enabling paid subscription, as they’re unsure about the quality of their product, at times they might have doubts whether it’s already in a state which is worth to pay for. Especially, as they’re well aware of the number of essential features that are still missing and are yet to come. Young web entrepreneurs also often assume that in the early stage they should focus on product design process and marketing that should assure good traction - assuming that when their product is good enough, its users will be eventually happy to pay for it.

What’s more one can think that restricting access to your app to the users that purchased the premium plans, you’re substantially limiting the sources from where you may collect the valuable feedback, which is important in the early release.

Focusing on the feedback

Another approach assumes enabling paid plans right from day one. This way, owners of the product show that they are certain of the high quality of their project and that it responds to the real needs of its potential users. Customers using a free trial and those applying for paid plans may not be exactly the same people. The fact that someone tried a free version, doesn’t mean that he will ever think of purchasing a paid version. By focusing on the traction instead of enabling the revenue right from the first day, you might be attempting to get feedback from the wrong user group. By continuing focusing on building the large user base in the long run you may and up in a situation where you are never convinced that your product is good enough to pay for it. 

Therefore starting the paid subscriptions right from the beginning, you may benefit from the chance of being able to instantly check how good your product is and whether there is anyone will to pay for it. No matter what the final result will be, you’ll get very important feedback. In case no one decides to pay for your app, you’d probably need to consider what influenced this - were you lacking an important feature or maybe the price you set was too hight? 

Whereas when your product will be bought by even a small number of users, you’d get a great source of information - possibly gathered right from the users that you care the most - those decided to pay. Surely you may be trying to ask for the feedback of those who used your trial, but let’s face it - it’s far more likely to get real and personal feedback from the person who made a certain investment than from the one who just used a free version - if it appears that the former is unhappy about what he got, he will surely let you know about this, while the latter probably won’t be bothered as the access to your product cost him nothing.

By launching paid subscriptions early you may also reduce the risk - the earlier you learn whether there is anyone will to pay for you, the better for you and your budget. Otherwise, after months (or years!) of constant development and gathering your community you may end with an app that users are rather unlikely to pay for, as the only reason that they joined was that it was free.

Surely starting the paid plans from day one doesn’t guarantee that you’ll start making money right away - also because of the relatively small scale at the beginning. Nonetheless, even a relatively small number of users who decided to pay for your app is a great source of receiving feedback about your service. Having the final target group of users active on your site, you may continue listening to their voice and continue building new features tailored just for those that are OK to pay your startup.

Which approach should you use?

Though product project is different and usually has its own specific target group, it seems that enabling revenue early is probably a wiser solution, that at the early stage allows you to check the market and get the feedback of your users. With this approach, you may focus on the right group of users and carry on with the development with them in mind.