At FusionAuth, we have a free software product that is a critical part of our business model.
A free product is pretty common in the software space because of two things:
- Software needs to be used to determine its efficacy; a software package is not like a shovel. With a free option, money is no longer a barrier (though time is).
- Software has zero marginal cost; once you put the effort in to build the first copy, you can create 1M copies for essentially the same cost.
However, supporting a free software product sure isn’t free. This post covers what you need to think about in terms of investing in a free product.
If FusionAuth were a public company, this is where there’d be lawyerese talking about forward looking statements and safe harbors and whatnot. Suffice it to say that this entire post is my personal opinion.
Side note: a free product is often but not always open source. Free can mean a tier of a SaaS, an open source project, or a downloadable product. Open source has additional complexities, so I’m going to focus on products that are “free as in beer” in this post. FusionAuth has a downloadable product that devs can run for free, within constraints.
We have internal discussions about tweaking the free version of the product. Options include:
- Keeping the product as-is, but making investments in the community version. This includes bug fixes and feature improvements. Since our free product is production ready and feature rich, this is a solid choice.
- Improving the free product. There are multiple dimensions to doing so, including:
- Improving discoverability of the free option, such as highlighting it more on the website, advertising it, or investing in additional documentation around its features and usage.
- Changing the license to make it usable across a greater number of use cases or with different limits.
- Move features currently restricted to paid plans to the free product.
- Degrading or limiting the free product. These are basically the flip side of improving it:
- Increasing friction to find or use it.
- Modifying the license to prohibit currently allowed use cases.
- Clawing back features from the free plan, focusing on features useful to businesses who are likely to pay. For example, the free plan currently allows unlimited SAML connections, which many competitors throttle.
For the foreseeable future, we are following the first path, improving the free product. The free product is usable and robust, and we get substantial benefits from the community’s usage.
Let’s dig into these benefits.
The value of the free users
First, if developers are using our free software to solve their authentication needs, they aren’t using someone else’s. While you can’t pay a mortgage with developer attention, that doesn’t mean it has no value. Such attention expands our mindshare and market share. More mindshare means that people are learning about our solution. Gaining market share means they aren’t using someone else’s solution. Therefore they are neither paying a competitor money nor getting more familiar with their solution.
Second, such users spread the word about our solution. Sometimes they talk about it on social channels and sometimes on a review site. But often it is prompted by us; here is an example of one of my favorite set of blog posts, entirely drawn from community experiences. Talking to community members has opened up my eyes to the wide variety of ways our product is used. Community stories are not, however, useful as case studies for the sales process. They aren’t detailed enough. But they are still helpful to spread the word about the product, highlight our community members and catch long tail keywords.
Third, free users improve FusionAuth. They do this by:
- Finding flaws in FusionAuth, such as bugs or regressions. Here’s an example issue, including workarounds.
- Requesting new features. We leverage the community further by asking users to upvote such requests so we know what the community wants from the product.
- Exercising the software by performing integrations that we would never have done. This is a variant on finding bugs. For example, a free user reported we aren’t to spec with regards to the SAML relay state; that’s never been an issue for the existing SAML integrations.
Finally, free users also offer each other support. While not all community members are active all the time (our community is more of a Google than a Facebook), a few have a presence on our forum, slack and GitHub issues.
The conversion of free users to paid users
Free users may purchase the software in the future. Once someone needs paid features, they may stop using the free plan and buy. We’ve built up trust as a solid solution in their mind and they have already integrated us. So a free user will consider paying you when they are looking to purchase.
Of course, you need a product worth paying for above and beyond your free offering. At FusionAuth, we accomplish this in three dimensions:
- Operating the product. Many of our customers are fine with the features of the free plan but don’t mind paying us to run it. This can include service level agreements (SLAs) as well, which are like catnip for enterprises.
- Paid features. These are either features good when you are at a certain size (like SCIM) or enhancements of features available in the free tier, such as a more customizable registration form or MFA policy. Choosing the features to charge for is critical, but is really hard to get good data for since it is very business specific.
- Support. Knowing you can ask questions of the engineers behind the product is valuable, especially for larger businesses.
There are two ways for free users to convert.
They can do it directly, where they use the free version to evaluate or run a “proof of concept” to ensure that our product meets their needs before they ever engage with us. We have plenty of customers who say “we’re already a few months into integrating with you” on our purchase kickoff call, and that ability to “get going” with the product without talking to a sales rep or pulling out a credit card makes the decision easier. Again, they trust the solution will solve their problem. They can also see how the company treats the free users and the community in general too.
There are also people who “kick the tires” with the free product and discover that it doesn’t meet their needs. We don’t hear about as many of those, but I have talked to a few. In this case, both parties win; getting to a quick no is not as good as a “yes” but is still pretty good. There are also people who do a self-led POC and incorrectly determine it isn’t a fit. They might miss features through lack of docs or a conceptual mismatch. We keep trying to improve our docs, education and product, but you can’t win them all!
There’s also an indirect conversion path, alluded to in the above mindshare point. Free users may use our software on a side project or to learn about authentication and OAuth in general. This lets them add FusionAuth to their toolkit. Then, later, perhaps years later, they can bring us into a project as an option to evaluate or to recommend us for purchase.
In general, free products let you build trust and de-risk purchases.
Keeping up with the Joneses, err the competition
Finally, competition matters. Lots of our competitors have a free offering. Again, this is due to the nature of software. Yay to zero marginal cost!
This is also compounded by the nature of developer tools. Devs are looking for tools to solve a problem, but once they’ve integrated one, it sticks around. One time I picked a bug tracking system in a few days (phpbt, what what!) and it was used at our company for years. This means if you have a friction free evaluation process, you stand a good chance of being embedded.
Offering a free product matters for our market positioning.
Nothing sells quite like free.
When you make a free product available, you are offering users something of value. Resources are scarce, and supporting the free product isn’t free.
Determining how much time and effort to expend supporting it depends on the value your company gains. You won’t always be able to calculate it in dollars and cents, but it exists nonetheless.