MBA2047 Why You Should Offer a Faux Free Plan + Free Ride Friday

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I first learned about the term faux free plan from Patrick Campbell. He's the founder of Profitwell. If you're looking to track your metrics for free, it plugs into your payment processor. It's pretty simple. You should check it out over at Profitwell. I was on a call with Patrick. He was giving me some advice when it comes to pricing and packaging. And in that discussion, he mentioned the term faux free plan. And I asked him, what's that? Well, he explained to me it's not exactly a free plan, but it's such an inexpensive plan. It gets people to try you out, it gets people through the door and it covers your expenses. And this could work no matter what you offer, whether it's a software or an online community or a library of materials. Whatever it is, if you have a reoccurring membership of some sort, you can launch a faux free plan. And by the way, even if you're selling physical goods like in e commerce, you can do this. Who's the biggest e commerce business out there? Amazon. And one of their moneymakers is their membership, the prime membership, which is monthly reoccurring. So as I teach these lessons, think about how you can apply it to your business and don't be afraid to be a little bit creative. So let me give you an example of a faux free plan. Now, like I said, faux free plans work really well for businesses that whenever a customer comes on board, there's an expense involved, there's something that's going to come out of your pocket to pay for the service, to pay for that member. So here's the example. Convertkit. Convertkit is an email marketing software. We use Convertkit. It's fantastic. Their founder, Nathan Barry has been working super hard on it for about eight years now and him and his team have done a fantastic job. Now, even though Convertkit has a free plan, they also have a faux free Plan. If you go to their pricing page, you'll see that their first plan is $9 a month billed annually. $9 is pretty cheap. You don't even think about it. Yes, the plan only comes with 300 subscribers, but it's enough for somebody to get started. Just like a trial or a free plan. I think this is a brilliant, brilliant idea. It gets people through the door, but not any kind of people. Serious buyers, people that are willing to put a little bit of money, a little skin in the game to try you out. And in exchange, you get a customer, a paying customer, and you stay profitable on a per customer basis. Because obviously somebody who's paying very little money every month, they're going to get less as a member and utilize your services at a lower scale. So if you have a product, if you have a service, if you have a software, whatever, whatever it is, and you're thinking about, I'm going to go with maybe 49 and $99 a month, maybe a higher tier at $150 a month. And you'd love to get into freemium. You'd love to maybe offer a free plan or even a free trial. But the free trial might be abused. The free trial might be costly on your side. Maybe you can't afford to service these people. Then a faux free plan is brilliant because like Convertkit, you can offer a really low, low priced entry point, $5, $9, whatever it is. And this allows your customer, your potential customer, to say, there's very little risk here for me to get started. Worst case scenario, I pay for one month. It costs me the price of a cup of coffee, something I probably don't think twice about. In some ways, it might even be just as appealing to sign up as a free plan. Now what's great about this is that now that you're actually charging the customer, you can offer a more full experience. Most of the time people can give a great experience to free members or free plan holders because they just don't have endless support staff. So, you know, maybe email support is available to them, but not chat support often. A lot of companies who have free plans don't even offer support to the free members. So by charging somebody even just a small amount, you're able to say, hey, I can serve this person and make them feel great and have a full experience so they can later on upgrade and grow with me. Now I'm going to give you a huge benefit of the faux free plan option. There's no development or planning or building costs. When you're trying to offer a free plan or a free trial with no credit card on file, or a limited trial or whatever it is. There are some things you're going to need to do in terms of your offering or in terms of the technology to limit that free user. We're talking about limits of features, limits of time, making sure that they're locked out of their account after the trial is over, all that kind of stuff, and making sure they can upgrade. There's a lot of intricacies here. Believe me, I know. We have a free plan. We've had a free trial for years. The point here is that it's a lot of work to offer a freemium model. A pure freemium model is a lot of work on the company. It also opens you up for a lot of vulnerabilities, a lot of bad actors, people that are signing up and abusing your service. You don't have to deal with any of that with the faux free plan concept because it's literally another plan. It's just another pricing choice and it acts just like your other plans, but it's just much more affordable, it's less expensive, and you don't have to worry about restrictions or time constraints or locking them out or making sure they can upgrade or any of that stuff. It's just so simple to implement. This is why I recommend if anybody's thinking about offering a free plan or a free trial before doing so, consider a full free plan. It's easy to implement and it's an easy way for you to test if that would be good enough for your curious potential customer.

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Of the headaches that people don't talk about when it comes to free trials in particular is if you have credit card on file. A lot of people that are on free trial will sign up and forget to cancel if they're not interested. Therefore they're charged after the free trial is over. This is how trials work. This often causes the customer to kind of get upset when they get their credit card bill. Reach out to your team and ask for a refund. This is a little annoying for you as a business owner because it kind of skews your ability to predict revenue and conversions. With a fo free plan, they're signing up in the moment and getting charged for it so there is no ambiguity. You know that when they sign up you're going to get paid. You can predictably monitor and track your conversions. I highly recommend you think about implementing a faux free plan in your business. In a lot of ways it makes a lot of sense for a lot of businesses because one it reduces a lot of problems and overhead, but also it allows customers to come in at a lower price. You're offering less so you can remain profitable, but you're allowing customers who are just getting started to get started. Thanks so much for listening to the $100 MBA show. Today's episode's not over though. It's Free Ride Friday. Let's see who won this week's Free Ride. And the winner is Living Fabulously. This is the handle on Apple Podcasts. Living Fabulously says valuable and actionable insights. 5 stars. Just the thing to cut through the noise with top notch value and fast to implement Actionable Insights. Thanks so much Living Fabulously for that great review. Your mission is to email me over at Omar100- MBA-NET so we can hook you up with a lifetime membership to Easy course over at EasyCourse co. It retails for $500, but living fabulously just won it for free. You too can win a free ride. Just leave us an Apple Podcast rating and review and listen in on Friday just like today to see if you won. Before I go, I want to leave you with this. Pricing plans, all that stuff is an experiment. It's always going to evolve, it's always going to change and you got to keep trying new things. Don't be afraid to change your pricing. Big players, big companies change and test their pricing constantly. The A B test they offer one price to one visitor versus Another. Different demographic, different prices for different countries. All kinds of stuff. And this helps them narrow down exactly what works and what doesn't. So go ahead and have a little fun experimenting with your pricing. It's the only way to truly know what works best. Thanks so much for listening, and I'll check you in Monday's episode. I'll see you then. Take care.

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