{"id":308337,"date":"2025-02-13T07:15:14","date_gmt":"2025-02-13T15:15:14","guid":{"rendered":"https:\/\/www.saastr.com\/?p=308337"},"modified":"2025-02-25T11:23:55","modified_gmt":"2025-02-25T19:23:55","slug":"is-ai-driving-a-freemium-renaissance","status":"publish","type":"post","link":"https:\/\/www.saastr.com\/is-ai-driving-a-freemium-renaissance\/","title":{"rendered":"AI is Driving a Freemium Renaissance.  Run Toward It."},"content":{"rendered":"<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"aligncenter size-full wp-image-308717 lazyload\" data-src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-13-at-3.34.41-PM.png?resize=1000%2C579&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"1000\" height=\"579\" data-srcset=\"https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-13-at-3.34.41-PM-980x568.png 980w, https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-13-at-3.34.41-PM-480x278.png 480w\" data-sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1000px, 100vw\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 1000px; --smush-placeholder-aspect-ratio: 1000\/579;\" \/><noscript><img data-recalc-dims=\"1\" decoding=\"async\" class=\"aligncenter size-full wp-image-308717\" src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-13-at-3.34.41-PM.png?resize=1000%2C579&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"1000\" height=\"579\" srcset=\"https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-13-at-3.34.41-PM-980x568.png 980w, https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-13-at-3.34.41-PM-480x278.png 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1000px, 100vw\" \/><\/noscript><\/p>\n<p>&nbsp;<\/p>\n<h3>So there are two massively different vibes in B2B and Cloud and SaaS today:<\/h3>\n<ul>\n<li><span style=\"text-decoration: underline;\"><strong>Folks fighting to keep slowing growth going.\u00a0 Which, perhaps ironically, leads vendors to be less customer-centric<\/strong><\/span>.\u00a0 Here, we see threats when customer attempt to cancel, big price increases every year, and renewal managers trying to force customers to buy extra seats they don&#8217;t need.<\/li>\n<\/ul>\n<p>but also<\/p>\n<ul>\n<li><span style=\"text-decoration: underline;\"><strong>In many high-growth AI-fueled spaces, massive competition as well.\u00a0 Which is pushing them to be more customer-centric<\/strong><\/span>.\u00a0 \u00a0OpenAI, Claude, DeepSeek, etc. are 3 big examples.\u00a0 All give you so, so much &#8230; for Free.\u00a0 It&#8217;s like the Good Old Days of Slack and Zoom.\u00a0 \u00a0Which back in the day, were so Free you almost couldn&#8217;t believe it.<\/li>\n<\/ul>\n<h3>So as part of the 10,000 new vendors we&#8217;ve seeing a rebirth of Freemium on many levels.<\/h3>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"aligncenter size-large wp-image-308338 lazyload\" data-src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-10-at-8.52.17-AM.png?resize=1080%2C1070&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"1080\" height=\"1070\" data-srcset=\"https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-10-at-8.52.17-AM-980x971.png 980w, https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-10-at-8.52.17-AM-480x476.png 480w\" data-sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1080px, 100vw\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 1080px; --smush-placeholder-aspect-ratio: 1080\/1070;\" \/><noscript><img data-recalc-dims=\"1\" decoding=\"async\" class=\"aligncenter size-large wp-image-308338\" src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-10-at-8.52.17-AM.png?resize=1080%2C1070&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"1080\" height=\"1070\" srcset=\"https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-10-at-8.52.17-AM-980x971.png 980w, https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-10-at-8.52.17-AM-480x476.png 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1080px, 100vw\" \/><\/noscript><\/p>\n<h2>How many AI-first tools are Freemium?\u00a0 Let&#8217;s ask them:<\/h2>\n<ul>\n<li>ChatGPT says 70%<\/li>\n<li>Deepseek says 40%-60%<\/li>\n<li>Claude says 60%-70%<\/li>\n<\/ul>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"aligncenter size-full wp-image-308340 lazyload\" data-src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-10-at-8.55.43-AM.png?resize=1000%2C504&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"1000\" height=\"504\" data-srcset=\"https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-10-at-8.55.43-AM-980x494.png 980w, https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-10-at-8.55.43-AM-480x242.png 480w\" data-sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1000px, 100vw\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 1000px; --smush-placeholder-aspect-ratio: 1000\/504;\" \/><noscript><img data-recalc-dims=\"1\" decoding=\"async\" class=\"aligncenter size-full wp-image-308340\" src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-10-at-8.55.43-AM.png?resize=1000%2C504&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"1000\" height=\"504\" srcset=\"https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-10-at-8.55.43-AM-980x494.png 980w, https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-10-at-8.55.43-AM-480x242.png 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1000px, 100vw\" \/><\/noscript><\/p>\n<p>If you are building a direct competitor to ChatGPT, you probably have to copy their pricing model, like DeepSeek.\u00a0 So you&#8217;ll know this.<\/p>\n<h3>But for the rest of the world?\u00a0 I want to challenge you that the rise of AI may be re-training us to expect Free as the default, and to expect the Free edition to actually be great:<\/h3>\n<ul>\n<li><span style=\"text-decoration: underline;\"><strong><a href=\"https:\/\/www.saastr.com\/5-interesting-learnings-from-pagerduty-at-480000000-in-arr\/\">PagerDuty, e.g. has gone much more enterprise &#8212; but they are also doubling down on Freemiu<\/a>m<\/strong><\/span>.\u00a0 In fact, all their customer growth is from Free.\u00a0 Even as the big push is $100k+ deals.\u00a0 More <span style=\"text-decoration: underline;\"><strong><a href=\"https:\/\/www.saastr.com\/5-interesting-learnings-from-pagerduty-at-480000000-in-arr\/\">here<\/a><\/strong><\/span>.<\/li>\n<li><span style=\"text-decoration: underline;\"><strong><a href=\"https:\/\/www.saastr.com\/5-more-interesting-learnings-from-hubspot-at-billion-in-arr\/\">HubSpot has gone both upmarket AND doubled-down on Free and Cheap, too.\u00a0 At the same time<\/a><\/strong><\/span>.\u00a0 Today, 47% of its customers &#8230; start on its Starter Edition.\u00a0 More <strong><span style=\"text-decoration: underline;\"><a href=\"https:\/\/www.saastr.com\/5-more-interesting-learnings-from-hubspot-at-billion-in-arr\/\">here<\/a><\/span><\/strong>.<\/li>\n<li><a href=\"https:\/\/www.saastr.com\/5-interesting-learnings-from-cloudflare-at-1-7-billion-in-arr\/\"><span style=\"text-decoration: underline;\"><strong>Cloudflare has doubled down on its Free edition and 200,000+ small customers &#8212; even with 65% of its revenue coming from its Large Customers<\/strong><\/span><\/a>.\u00a0 More <a href=\"https:\/\/www.saastr.com\/5-interesting-learnings-from-cloudflare-at-1-7-billion-in-arr\/\"><span style=\"text-decoration: underline;\"><strong>here<\/strong><\/span><\/a>.<\/li>\n<\/ul>\n<p>Free and Freemium are back.\u00a0 Not just for consumer and SMB.\u00a0 But as a pipeline for bigger customers, too.\u00a0 Cloudflare, HubSpot, PagerDuty and many more are proving this by doubling down on Free, Freemium and their smallest customers. Even as they go more enterprise.<\/p>\n<p><iframe title=\"Adding AI to SaaS: Inside the AI Product Strategies of Figma, Cloudflare, GitHub and Ramp\" width=\"1080\" height=\"608\" data-src=\"https:\/\/www.youtube.com\/embed\/g0TUfIOn_Ts?feature=oembed&#038;enablejsapi=1&#038;origin=https:\/\/www.saastr.com\"  allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" class=\"lazyload\" data-load-mode=\"1\"><\/iframe><\/p>\n<h3>But what about the &#8220;cost of AI&#8221; many start-ups ask?\u00a0 We can&#8217;t afford Free and Freemium.<\/h3>\n<p>Cry my a river.\u00a0 \u00a0And first, costs are falling so quickly in AI this year, it&#8217;s epic.\u00a0 What cost a lot last year may barely cost anything this year.\u00a0 And second, just get good at it.\u00a0 Get better at using AI.\u00a0 And costs often will fall.\u00a0 And third, embrace it.\u00a0 Find a way.<\/p>\n<p>I&#8217;m a small investor in Opus Pro, which is the #1 video clipping tool.\u00a0 It&#8217;s always had a massive amount of Free users &#8212; they expect it.\u00a0 And even when AI costs were 10x what they were today, it managed to be profitable.\u00a0 It wasn&#8217;t easy, but they worked on it every day, every hour.\u00a0 They had it.\u00a0 And they found a way.<\/p>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"aligncenter size-large wp-image-308342 lazyload\" data-src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-10-at-9.03.43-AM.png?resize=1000%2C378&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"1000\" height=\"378\" data-srcset=\"https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-10-at-9.03.43-AM-980x371.png 980w, https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-10-at-9.03.43-AM-480x182.png 480w\" data-sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1000px, 100vw\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 1000px; --smush-placeholder-aspect-ratio: 1000\/378;\" \/><noscript><img data-recalc-dims=\"1\" decoding=\"async\" class=\"aligncenter size-large wp-image-308342\" src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-10-at-9.03.43-AM.png?resize=1000%2C378&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"1000\" height=\"378\" srcset=\"https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-10-at-9.03.43-AM-980x371.png 980w, https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-10-at-9.03.43-AM-480x182.png 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1000px, 100vw\" \/><\/noscript><\/p>\n<p>Some categories demand a Free and Freemium edition.\u00a0 Almost every category, outside of very, very enterprise software, can benefit from it.\u00a0 Do it right, and you&#8217;ll have 10x or even 100x the size of folks championing you.\u00a0 And marketing you.<\/p>\n<p>And finally, customers are expecting Free and Freemiun more and more often.\u00a0 Don&#8217;t run from it, especially in tougher times.\u00a0 Embrace it.<\/p>\n<p><iframe title=\"The Chat GPT Growth Story: How AI is Changing the Way We Work with OpenAI&#039;s Head of Sales\" width=\"1080\" height=\"608\" data-src=\"https:\/\/www.youtube.com\/embed\/8XSmkc_5Kws?feature=oembed&#038;enablejsapi=1&#038;origin=https:\/\/www.saastr.com\"  allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" class=\"lazyload\" data-load-mode=\"1\"><\/iframe><\/p>\n<p>SaaS was always supposed to be &#8230; a service.\u00a0 And often, one you can try before you buy.\u00a0 It&#8217;s time to get back there.<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">Wild how the price of AI functionality that costs $$$ to develop and $$ to operate is being subsidized to zero &#8211; to gain market share.<\/p>\n<p>By Google making this move: expect Microsoft to follow, and AI coding startups having little to no choice but to also offer generous free tiers. <a href=\"https:\/\/t.co\/XIhOK6RS6S\">https:\/\/t.co\/XIhOK6RS6S<\/a><\/p>\n<p>&mdash; Gergely Orosz (@GergelyOrosz) <a href=\"https:\/\/twitter.com\/GergelyOrosz\/status\/1894454484291469564?ref_src=twsrc%5Etfw\">February 25, 2025<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>&nbsp; So there are two massively different vibes in B2B and Cloud and SaaS today: Folks fighting to keep slowing growth going.\u00a0 Which, perhaps ironically, leads vendors to be less customer-centric.\u00a0 Here, we see threats when customer attempt to cancel, big price increases every year, and renewal managers trying to force customers to buy extra&#8230; <br \/><a class=\"more-link fade\" href=\"https:\/\/www.saastr.com\/is-ai-driving-a-freemium-renaissance\/\">Continue Reading<\/a><\/p>\n","protected":false},"author":19,"featured_media":308717,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","om_disable_all_campaigns":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_wpscp_schedule_draft_date":"","_wpscp_schedule_republish_date":"","_wpscppro_advance_schedule":false,"_wpscppro_advance_schedule_date":"","_wpscppro_custom_social_share_image":0,"_facebook_share_type":"","_twitter_share_type":"","_linkedin_share_type":"","_pinterest_share_type":"","_linkedin_share_type_page":"","_instagram_share_type":"","_medium_share_type":"","_threads_share_type":"","_selected_social_profile":[]},"categories":[24898,31,24987],"tags":[],"class_list":["post-308337","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ai","category-blog-posts","category-saastr-ai"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-13-at-3.34.41-PM.png?fit=1000%2C579&quality=70&ssl=1","jetpack_shortlink":"https:\/\/wp.me\/p5oib2-1idb","jetpack_sharing_enabled":true,"fifu_image_url":"https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/02\/Screen-Shot-2025-02-10-at-8.53.02-AM-1691x1080.png","_links":{"self":[{"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/posts\/308337","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/users\/19"}],"replies":[{"embeddable":true,"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/comments?post=308337"}],"version-history":[{"count":9,"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/posts\/308337\/revisions"}],"predecessor-version":[{"id":309171,"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/posts\/308337\/revisions\/309171"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/media\/308717"}],"wp:attachment":[{"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/media?parent=308337"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/categories?post=308337"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/tags?post=308337"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}