The math just doesn’t work out. Free tier users cost increased 10-100x because of inference cost.
If your free tier uses LLMs and you pay the API costs, the math is horrendous:
An average free user with 10-12 sessions a month and costs you around $2.80 per month. Heavy free users probably cost 10x.
And even if 5% of users convert at $20-50/mo that just doesn’t work out.
Potential fixes but none is optimal: Give free users cheaper models (but now you're demoing a dumber product). Credits, which is what everyone did, but that just caps the bleeding and teaches people to use your product less. Or let user bring their own key, which works but kills casual signups.
Is anyone here still doing free tiers successfully? If so, how?
EDIT: title meant to say Free Tiers
EDIT2: more about the math here