It's not about money!

0 -the number zero- has unique properties. 0 * x = 0, and you can’t divide x by 0. See, 0.000001 doesn’t even come close. Either you are the almighty zero, or you are some other number.
Something similar happens in economics with Free — a price of zero. Say you buy your favorite pen for $2. If the price drops to $0.50 during a sale, you might get several. But what if it’s free? By the same token you should get as many as you can. But you won’t. When it’s free, it’s not about pricing anymore, we’ve moved to the realm of social norms. You’ll pick just one and say thank you. In behavioral economics this is known as the zero price effect.

I’ve recently published a couple of posts discussing free alternatives to paid services. Guess what, it’s not even about the price.

First, you don’t need to care about failed payments for free services. Say your card gets compromised and cancelled, and you forget about one of the services you use. If the failed payment notifications get classified as spam, you might never find out. The service will eventually fail. If your Spotify subscription gets cancelled, it’s an easy fix with no consequences. If your domain renewal fails and someone else grabs it, you’re in for a real headache.

Second, you will learn hard things. Paid services are good at making it dead easy for you, since even slight difficulties can impact their conversion funnel; one-click this, one-click that. Set up a HTTPS certificate through Let’s Encrypt and you will learn. Open up a port in your router that takes you to a docker container in one of your machines and you will learn. Being hacked will also teach you, so be cautious.

Third, flexibility. Paid services are convenient black boxes. The moment you outgrow the black box, you have little choice as you are a renter, not an owner. Good luck convincing your provider to meet your needs.

Finally, money! I guess I meant it’s not only about the price. If you provide a paid SaaS, the model is sustainable: you charge users $9, and use $0.50 to pay for all the costs you incur to serve them. More users, more cash, life is good. But say you want to offer something free. A well-known authorization service charges $0.02 per user/month. Your free service blows up and you have 1 million sign-ups. Now you’re on the hook for $20,000/month. Now add DynamoDB, Lambda, etc.

Of course, paying for stuff comes with advantages too. If you pay just a little bit, you will get some level of support. Also, I don’t feel compelled to fund the lavish lifestyle of megacorp CEOs, but I like to support smaller services I care about. Giving them money is the way to show that support. As in-between, many paid services offer a generous free tier. I get a ton of utility out of Cloudflare’s free tier (including serving these notes) and also host my source code on GitHub’s free tier, including free private repos and free CPU for GitHub Actions (CI/CD). In some cases your needs will be fixed, in some others they will scale with usage. When it’s the latter, project what would happen if your stuff goes viral and enter into the paid territory.

I am quite satisfied with my mix of paid, free and freemium services. Just think about the hidden trade-offs, where the money may end up being the least important thing.