A pricing model is the strategy you use to set the price for your product or service. For a new software product, the first pricing decision is one of the most critical you’ll make. It directly impacts your ability to acquire users, gather feedback, and generate revenue. The three most common starting points are offering the product for free (freemium), providing it to a select group for testing (beta), or charging for it from the start (paid).

Choosing the right path depends on your product, your market, and your business goals. Each model serves a different strategic purpose, from maximizing user growth to validating market demand as quickly as possible.

Understanding the mechanics of each model helps clarify which one aligns with your goals. These strategies are not just about price; they’re about how you position your product to your first customers.

Here’s a breakdown of the three main approaches:

• Freemium: This model offers a basic, feature-limited version of the product for free, forever. The goal is to attract a large user base and then convert a small percentage of them into paying customers for a premium version with more features, higher limits, or better support.
• Beta: A beta model offers the product to a limited group of early adopters, either for free or at a steep discount, for a temporary period. The primary goal is to gather feedback, find bugs, and refine the product before a full commercial launch. The understanding is that the product is still a work in progress.
• Paid: This is the most straightforward model. You charge every user a fee to access your product from day one. This approach prioritizes revenue and market validation over mass adoption, forcing you to prove your product’s value immediately.

Your product’s nature and the market you’re entering should guide your decision. There’s no single best answer, only the best fit for your specific context.

Freemium works best when your product has the potential for a very large user base and low marginal costs for supporting free users.

• You’re in a competitive market: A free offering can be a powerful tool to get users to try your product instead of a competitor’s.
• Your product benefits from network effects: If your product becomes more valuable as more people use it (like collaboration tools or social platforms), freemium can help build that critical mass quickly.
• The path to “aha!” is quick: Users should be able to experience the core value of your product quickly without needing extensive setup or support.

A beta model is ideal when you’re confident in your product’s core idea but need real-world usage to refine its features and user experience.

• You need detailed feedback: Beta users are often more willing to provide in-depth feedback and report bugs in exchange for early access.
• Your product is complex: For sophisticated tools, a beta phase allows you to build out documentation and support resources based on the challenges early users face.
• You want to build a community: A closed beta can create a sense of exclusivity and help you build a strong relationship with your first group of passionate users.

Charging from the start sends a strong signal that you are offering a valuable, complete product, not a project.

• You solve a high-value business problem: If your product saves customers significant time or money, they will be willing to pay for it immediately.
• Your target market is a niche: When serving a specific professional audience, you can often command a price from the beginning because the alternative is a manual process or a much more expensive tool.
• You need to fund the business: For bootstrapped founders or companies that need to demonstrate traction to investors, early revenue is the clearest indicator of a sustainable business.

Each model comes with its own set of potential pitfalls. Being aware of them can help you navigate the early stages of your product launch more effectively.

• The freemium support drain: A common misconception is that free users require no resources. In reality, they still need server space, customer support, and maintenance. A successful freemium model requires a clear, compelling upgrade path to ensure free usage doesn’t just become a cost center.
• The perpetual beta trap: It can be tempting to stay in a free or discounted beta phase for too long, fearing that users won’t pay the full price. This devalues your product and can make the eventual transition to a paid model difficult and jarring for your early adopters. Set a clear timeline and communicate it.
• The paid model’s growth barrier: While a paid model validates value, it also creates friction. A price tag, no matter how small, will deter some users from signing up. This can slow down the feedback loop and make it harder to gather the volume of data needed to improve your product.

Whichever model you choose, you need a flexible billing system that can adapt as you learn and grow. Kinde’s billing tools are designed to support these early-stage pricing strategies and scale with you.

You can implement each of the primary models easily:

• Freemium Plan: In Kinde, you can create a “Free” plan by setting up a plan with a $0 fixed charge. You can then add unmetered features to define what free users get access to, creating a clear distinction from your paid tiers.
• Paid Plans: You can structure multiple paid tiers using a combination of fixed monthly subscription fees and metered, usage-based features. This allows you to build out “Good,” “Better,” and “Best” options that cater to different customer needs.
• Beta Programs: You can create a specific, invitation-only plan group in Kinde with a discounted price for your beta testers. When your beta period ends, you can seamlessly migrate those users to your standard public pricing plans.

By providing the infrastructure to create and manage diverse plans, Kinde allows you to focus on finding product-market fit instead of building billing logic from scratch.

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