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5 painful lessons startups are learning from the slow death of free cloud services

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Yowza: When LogMeIn(s logm) announced that it was ending the free version of its remote access software after ten years, it probably expected blowback but I’m not sure it anticipated the vitriol spewed in comments on that move both on our story and on Twitter.

First, let me say this: the LogMeIn people are very nice. As are, I’m sure, the folks at SugarSync, which pulled its free storage and file sync product in December; Droplr, which followed suit in January.

The user reactions expressed ranged from white-hot outrage to peeved annoyance to resignation. Many of the enraged or irritated users felt that a: they weren’t given enough notice and/or b: they’d be happy to pay but that the new price plan was “too damn high” for what they needed. Many of that cohort said they were hitting the highway for some still-free alternative. It is, of course, impossible to tell if they ended up doing so or sucked it up and got out their credit cards.

Synthesizing the comments, here are a few things vendors thinking about taking an ax to their free services should consider before wielding it.

1: Set expectations from the get go.

First off, if you plan to introduce a free product, it’s best not to label it as “forever free” even if that is your intention. Nothing lasts forever and you can bet that a super-irked and vocal set of your users will hold you to those words — and hurl them back at you in a very public forum. But for most vendors, who’ve arleady gone down the freebie route and who already used the Forever Free mantra, it’s too late. Gird yourselves and go to number 2.

2: Beware of the user vs. customer distinction.

You may not think of users of your free product as customers — customers pay for something, right? — but many of those users would disagree. Vociferously. So go easy. Don’t poke the bear.

Free lunch

3: Offer plenty of notice.

It’s gonna be a tough sell (cough) to end a free product, but if you do it, give people time to figure their plan of action. A week is too short a period. A month or two, much better.

4: Give people a good reason to pay.

An unscientific poll of friends and family turned up several who willingly upgraded for a paid version of a freebie. One colleague pays for Google Drive to get more than the 15GB you get for free.  Another started paying for Spotify to lose the ads and to be able to download songs for offline listening. For this self-described “poor 20-something,” going from zero to $9.99 a month was not something done lightly, but she’s glad she did it. Another used AwardWallet to track frequent flier and hotel miles for the free six-month intro and was so pleased that he signed on to continue on the paid service.

5: Develop a thick skin.

Be prepared for the vultures to circle. Any and every company that offers a freebie even remotely analogous to your soon-to-die product will descend on the comments pages and social networks to woo your disaffected users. As an analyst once told me, it’s hard to beat free. So when you decide it’s time to pull the plug, do it as nicely as possible, explain the options clearly, make sure there’s a transition period.

Then duck.

Feature photo courtesy of Flickr user Martin Cathrae

4 Responses to “5 painful lessons startups are learning from the slow death of free cloud services”

  1. James Sposto

    Free is sustainable if it has a purpose that is mission critical to the paid customers. At we have a free version that anyone can use, but that component is necessary to our paid users who work with many outside customers and vendors that also need access to the system. So when they are invited to collaborate on a project each of those users automatically get a free-forever account (the only limits being the number of projects they can create themselves, and the amount of storage.)

    This way, in addition to acting as a “forever free trial” of the software, the free version works as an organic growth and exposure tool – because if those invited users like the experience working with the service, they can upgrade to a paid account in one step.