Why free trials are killing your startup

Title: Why free trials are killing your startup

Read time: 3.5 min

Today, I want to talk about a painful conversation I have with founders. It's about free users, validation, and why technical founders default to Product Led Growth (PLG) when they should be leaning into Sales Led Growth (SLG) to sell.

I once had a former client. Brilliant developer. Built an incredible dev tool. Had 75k daily active users. 160k monthly active users.

All free. Not one paying customer.

When he finally tried to monetize, less than 5% converted.

I watched him go from excited to devastated. He thought he'd built something the market wanted. He had the users to prove it, right?

Wrong.

He'd built something people would use for free. Completely different problem. Fortunately for him the company was actually acquired, so in the end there was a silver lining.

This isn't a one-off story. I see this pattern constantly with technical founders who are scared to sell.

The mistake we made was thinking that we could just 'do sales' when we needed to. In reality, sales is an engineering discipline; it requires building a system that scales.

~Ben Horowitz (a16z)

Let's think about this from first principles. What do we know is true about human behavior?

People will always choose free over paid if given the option.

It's not complicated. When you offer a free tier, you're training users to extract value without paying, and once they're comfortable with free, converting them to paid requires them to admit they were wrong about the value.

Nobody wants to do that.

Here's what actually happens with free tiers at the early stage:

1. You attract tire-kickers, not buyers

People who sign up for free aren't necessarily validating that your product solves a real problem. They're validating that they'll take free all day.

There's no skin in the game. No urgency. No real commitment to making it work.

2. You have no idea if you've built something people need

Usage doesn't equal value. I can use a free tool every day and still not be willing to pay for it. The only real validation is: will someone give you money to solve this problem?

3. You delay the hard conversations

When someone pays you, they tell you exactly what's broken. They hold you accountable. They provide you with genuine feedback because they have a vested interest.

Free users ghost you when it doesn't work, and you never know why.

4. You extend your indications of PMF by months, sometimes years

Every month you spend building for free users is a month you could've spent learning from paying customers.

By the time you try to monetize, you've built features nobody will pay for.

What Successful Companies Actually Did

Here's what kills me about the PLG narrative:

Everyone points to Slack, Dropbox, and Notion as PLG success stories, even the new kids on the block, such as Loveable, Replit, and Cursor.

But that's not how the majority of them started.

They all had boots-on-the-ground sales motions before scaling with PLG. They validated PMF through direct engagement, manual onboarding, and strategic distribution.

They sold before they scaled.

For every Slack, there are tens of thousands of startups that tried PLG first and died.

I believe the number is 91% of startups fail. Only 9% make it.

Betting on PLG before you have PMF is playing terrible odds.

The Better Way: Charge From Day One

When my friend with 75K free users finally came to work with me, here's what we did:

We killed the free tier.

Not reduced it. Killed it.

Then we built a paid POC offer that was impossible to refuse:

"For $2,500, we'll run a 30-day sprint to solve (specific problem). If we don't deliver on the two outcomes we agree on upfront, we'll refund you and give you an additional 30 days free. All we ask in return is that if we crush it: move to an annual contract and let us use you as a case study."

Within 60 days, he had 12 paying customers.

Not 75,000 free users. 12 people with skin in the game who told him exactly what to build.

That feedback was worth more than everything he learned from 12 months of free users.

What You Can Actually Do This Week

1. Kill your free tier (or put a 60-90 day limit on it).

Free users will drain your resources and be dishonest with you about the value they provide.

If someone won't pay $20/month to solve their problem, they don't actually have a problem worth solving. Stop letting people avoid the real question: Is this painful enough to justify the cost?

A credit card is the only honest validation that matters.

Force that conversation early, or you'll build for people who were never going to be customers.

2. Build a paid POC offer instead

Price it at 5-10% of your annual contract value. For most early-stage startups, that's $1K-$10K. Frame it as a Proof of Concept or ROI sprint, not a "trial."

Make it risk-free with guarantees: if you don't hit two agreed outcomes, a full refund.

3. Focus on high-touch early customers

You need 10-20 paying customers who will tell you the truth, not 10,000 free users who ghost you. Every paid customer gives you real feedback, case studies, and social proof.

That compounds into more customers.

4. Validate before you scale

Once you have PMF, strong conversion, real usage, and customers who can't live without you, then consider adding a self-serve motion.

But not before. First, figure out who buys, why they buy, and how they use it.

Then scale.

Here's What I Wish Someone Had Told My Friend Earlier

You're not going to produce your way into revenue.

At some point, you have to learn to sell. And the sooner you do it, the faster you'll know if you're building something people actually want.

Free users will lie to you. They'll tell you it's great. They'll use it every day.

But when you ask them to pay, they'll ghost.

Paying customers tell you the truth. They hold you accountable. They force you to deliver value, and that's how you find PMF.

Takeaway

I can't make you charge for your product. Some founders will read this and go back to building free tiers because it feels safer.

But if you're tired of fake validation, tired of building features nobody will pay for, tired of wondering if you've actually built something the market wants, then start charging. Reach out to us. We can help.

The fastest way to know if you've built something valuable is to ask someone to pay for it. Everything else is just noise.

Let's get you some real customers. 💪

See you all next week!

Darren

P.S. If you’re a venture-backed company interested in coaching, book a call here.