Free tiers and free trials are both common customer acquisition models in the SaaS industry. Some companies even use both techniques. When we launched the Dragonfly Cloud service, I sat down to decide which model would work best for us.
TLDR; there will be no free tier!! It doesn't make sense for our business or our customers. Instead, we offer a free trial—a more sustainable and equitable way to introduce users to our product. Here's why.
Free Tier vs. Free Trial: What's the Difference?
I am sure you've experienced both free tiers and free trials before, but for the sake of making sure we're on the same page before moving forward, here's a quick reminder: both free tiers and free trials are designed to help potential customers get a feel for a service before making a financial commitment. In a free tier, users are given ongoing access to a limited version of the service, often with caps on usage or features. A free trial, on the other hand, provides full access to the service for a limited period, after which the user must decide whether to become a paying customer.
Both models aim to lower the barrier to entry, but in fact the difference between these models is critical for building a healthy business and customer experience.
The High Cost of Performance
For any service, the decision to offer a free tier or free trial comes down to one key factor: the cost of acquisition. If you can acquire customers with a reasonable payback period, then the model makes sense. With a free tier, this cost is uncapped since the time is uncapped, which means that a free tier makes sense when running a very low-cost service—especially when the customer isn't actively using it. This is where the difference between in-memory data stores like Dragonfly and disk-based solutions becomes critical.
Take, for example, databases like Neon, which have decoupled storage from compute. By keeping only a limited amount of data on low-cost storage and allocating compute resources only when needed, Neon minimizes its hardware costs. This architecture enables Neon to offer a free tier because the service cost is kept to a minimum (cents per GB per month), particularly when the customer isn't actively using the service.
However, with sub-millisecond in-memory data stores like Dragonfly, the story is different. For us, compute and storage are inseparable. Keeping a sub-millisecond latency service means that we must always have a running instance ready with the data in RAM, even when there is no usage at all. RAM and CPU are far more expensive than keeping idle data on disk storage, which brings the minimum cost of service to a few dollars per month. This creates a vastly different cost structure, one where offering a free tier simply doesn't make sense.
Subsidizing Non-Customers
When you spend significant amounts on acquiring leads—sometimes tens or even hundreds of dollars each—a few dollars for a potential customer per month might seem small in the context of a company's marketing budget. However, free trials and free tiers grow in very different ways. Let's take the example where marketing is able to generate 2000 leads per month, and let's assume the cost of $2 per trial per month. Here is how our monthly spend will grow:
Free Trial and Free Tier Cost Comparison
The free trial grows hand in hand with marketing, and with a free tier, you also need to service old leads that are still using the free tier. In the first year, a free trial program will cost us $48K and a free tier program $312K. But in the second year, while a free trial still costs $48K, a free tier will cost $888K. Of course this model is simplified and does not take into account churn and conversions. There are other optimizations that could be made, but the overall picture remains the same.
Ultimately, someone has to cover the ongoing cost of free-tier customers, and that "someone" ends up being the paying customers. We don't believe that asking our paying customers to subsidize a free tier is in the best interest of our customers, so we won't do it.
Source Available Beats Free Tier
Some may argue that all customers will need some form of free tier for purposes like testing or training. For those needs, we already have the perfect solution: the Dragonfly Community edition, available for free on GitHub.
The Dragonfly Community edition can run on your own hardware and is completely free (under the license) for any workload, whether it's testing, development, or even production. This gives users full control to experiment with Dragonfly in their own environments, at the cost of hardware and time, without compromising on functionality.
Feeling the Full Power of the Dragon(fly)
We created Dragonfly to break the limits of legacy in-memory data stores. The best way for you to experience the quality of Dragonfly is to try it yourself, without limits. Our free trial gives you access to everything Dragonfly has to offer, so you can see how it performs with your specific workload. There are no hidden corners or features that only unlock after you become a paying customer. What you see is exactly what you get.
In a world where free tiers are often expected, we're taking a different approach—one that's aligned with the interests of our customers and sustainability for our business. If you're ready to see what Dragonfly can do for your applications, sign up for a free trial. We don't offer a free tier, but what we do offer is the most performant and cost-effective in-memory data store in the universe!
