5 Tips To Transition Your Business Model From A Free To A Paid Service

Offering a free service is all well and good, but at some point there has to be plans to make a more significant profit. Start-up businesses often begin by offering free trials and free subscriptions, but as they gain momentum the desire to charge is understandable. Some customers are bound to be outraged when a change occurs, so here are some top tips to make the transition easier.

Make it a Gradual Process

Your transition from free to paid services should be gradual and your customers should feel that they’re getting value for money. You could start by suggesting a fee if something specific occurs, such as the renewal of a particular service. Alternatively you could consider a slow but steady approach with fees increased on an incremental basis – perhaps per quarter. It may seem like a slow burn but it’ll improve your customer retention.

 

Utilise the Grandfather Clause

The Grandfather Clause is a valuable asset if you’ve built up a strong and loyal customer base. This clause allows you to offer different charges to different customers without seeming unfair or illegal. If you want to start charging new members a set fee but consider a lower fee for your veteran customers, they may be more accepting of this. There will still be the feeling that their loyalty is valued. You could offer existing customers a lifelong discount, or it could be just for a short period to say thank you for their custom.

 

Keep on Offering Freebies

If you want your customers to stay on board then you’ll need to ensure there are ways of still accessing elements of your product or service for free. Perhaps you could offer a points-based loyalty scheme which means, in time, customers could earn free access to your service or discounts off your products. This is something you would need to work on to see how much of your business you can afford to keep giving away for free.

Virtual currency has become big business and it’s a way of further embedding customer loyalty and keeping your users on board, even if charges are introduced.

 

Keep them informed

If you value your customers you’ll keep them in the know about your potential changes. Springing this information on them will not do your brand any good and will ultimately lead to a larger customer loss. As well as key announcements, gauge opinion – it gives you a chance to ensure negative feedback is kept to a minimum. Your customer base will appreciate your honesty.

 

Offer Fair Prices

Your charges will of course be mainly linked to your long-term business plan but you also need to think about your customers. You can’t suddenly expect huge revenue from what was a free service and you’ll need to start small. A small fee will be accepted more easily than a huge price hike and in time you can increase.

Moving from a free service to one which charges is difficult but it doesn’t have to be painful and work to the detriment of your business. Your customers just need you to be honest, keep them informed and be fair.

 

Author: Carlo Pandian is a freelance bloggers and tutorial writer on Intuit QuickBooks small business accounting software –http://www.intuit.hk/. He is interested in finance, start-ups and web marketing and loves providing business tips to the entrepreneurial community of The Hive co-working space.

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