🛑 Freemium trap

👋 Hey — Egemen here.

I’ve come across an amazing report last week on monetization.

Companies offering a freemium tier experience a completely different reality.

Their initial revenue stays relatively flat for the first eighteen months.

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I read a detailed breakdown on software pricing models published by ProfitWell (acq by Paddle) a few days ago.

The data from their mid-March study confirms a trend I have been tracking across several different markets.

The freemium model is becoming a significant trap for early-stage founders. Founders used to believe that giving away a basic version of a product was the easiest way to build an audience and eventually monetize.

The primary issue is that free users provide a false sense of product validation. A startup might see thousands of new signups every month and the team feels confident they are building something valuable.

Free users do not actually validate a core business hypothesis. They only validate that people enjoy free software.

When it comes time to raise the next round of funding, investment partners are completely ignoring these free tier metrics. They want to see a clear willingness to pay from the very beginning.

_{(Source: ProfitWell, "The State of SaaS Monetization", March 18, 2026)}

👉 Here’s the main takewaway based on what I’m seeing: Startups that enforce a hard paywall or a strict time-based trial reach their first million dollars in revenue much faster than those relying on an open freemium tier.

The paid-only approach forces a founding team to build features that solve immediate and painful problems. It aligns product development strictly with the needs of people who value the work enough to pay for it.

Removing a free tier entirely is the best path for companies still searching for primary growth channels. Charging for a product immediately reduces the overall volume of user feedback. The actual quality of that feedback improves immensely because it is coming from real buyers.

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