Is free always better? Sometimes NO!
When we were defining Parnity’s business model, we reached an important point for any company: Monetization. How would we make money? The usual business model within the market we were entering didn’t please us at all and it was one of the reasons we wanted to innovate within the niche of helping freight forwarders to have better results through their network of partners.
“Let’s launch Parnity 100% free”, so we’ll already show our philosophy of delivering solutions and attract the largest volume of freight forwarders possible, after all, they would pay absolutely nothing to enjoy better-developed features than those they currently need to pay thousands of dollars a year.
There were no gaps in this reasoning, right? WRONG! Although we gained a lot of traction in our first months, we were faced with a lower conversion rate than we had hoped for between site access and user conversion. Imagine our surprise when we found out that the overwhelming majority of the questions we received were of the type:
“How can this be free? What’s the catch behind it?”
“Will you use my data for sale? What’s the point in delivering all this free of charge?”
“How do you make money?”
“How do you keep your company?”
A market not used to freemium models, can’t deal with one which still didn’t have a clear monetization plan. What we saw was a fear of joining a new platform and that offered a lot, without asking anything in return. Our mistake! It wasn’t surprising that it was like this. Having already worked 6 years inside this market, we should have already mapped the natural distrust that forwarders have when it comes to what seems “too easy”. A market that deals daily with “loss forecast”, based on payments that will not be received and operational problems.
I repeat, our mistake. But I add, important learning! We have immediately tried to make clear in our communications our plans and the reason for being, until now, offering constant improvements in our product without charging any dollar for it.
The great challenge of a business model like ours, where we aim to innovate within a niche that for over 40 years works basically with the same solutions and offer mutual gain (where the user wins and the company wins), is to find the right way to monetize and more than that, the right time to do it.
The moment has arrived, we are a few months away from launching our subscription plans. A deep work of intense research and analysis of usage behavior of Parnity, which I make a point of coming to share with you in a near opportunity, are taking us to a great moment. Validate in practice how our users and target market adheres to our business model and how willing they are to pay for what we offer. Scenes from an exciting next chapter!
