Compared to just a few years ago, SaaS is getting harder. Well it’s actually getting easier to build and launch a SaaS company and that’s why it’s also getting harder: easier to start a company → more companies launched → more competition.
It’s hard to find a completely virgin industry or vertical. And this is especially true for some specific industries. Martech is one of those. But it gets worse: within the broad “martech” category there are some specific subcategories that seem to be especially crowded; “Conversational Marketing & Chat” is one of those.
As per Chiefmartec.com from 2019 to 2020 the subcategory grew by 70%.

It’s hard to be seen and get adopted when the market is so crowded. But there’s one company that adopted a clever strategy to differentiate itself from the competition.
I think we can agree on the fact that when you can claim your product is 100% free, that’s great way to get new customers. And that’s exactly what Tawk.to does. It’s their main differentiator and they want to be sure you know their product is 100% free.
It’s the first thing you see when you google their name.

It’s also stressed on their homepage.

And instead of the usual “Pricing” page you would expect on a SaaS marketing website they have a “Why Free?” page.

And this is actually the most interesting page because here’s where founder Robert explains the strategy and thought process behind their free model.
So if you are wondering how a bootstrapped company can actually make money and serve millions of people?
Up until a few months ago you could only pay for two things:

• Removed “Powered by tawk.to” branding
• But more interesting Tawk.to charges you ($1/hr) for professionally trained, native speaking people who are trained to answer chats on behalf of your business 24X7.

So, it’a pretty interesting business model that can define as SaaS++: you are charging for a service on top of a software.
I don’t have data about their conversion rates but I guess that when you can just start to use the product right away, with no credit card details to give, knowing that you are not on a free trial but actually using a product for free, it’s easy to build a large customer base.
You don’t see this model very often but you can apply it to a number of other industries:

1. Education & Training Platforms: Similar to Tawk.to’s approach in the Conversational Marketing & Chat industry, educational platforms can offer their basic courses or learning materials for free. They can then monetize through certification fees, premium content, advanced courses, or one-on-one tutoring services. This approach can help to build a large user base by providing value upfront, thus encouraging users to invest in their education as they seek to gain more specialized knowledge or credentials.
2. Health & Wellness Apps: Free access to basic app functionalities such as tracking steps, water intake, or sleep patterns can draw users in. The platform can then offer personalized nutrition plans, one-on-one coaching, advanced health insights, or integration with other fitness devices for a fee. By initially offering a useful, free service, users are more likely to trust and invest in additional offerings.
3. Project Management Tools: Offering basic project management features for free can attract startups and small teams. The service can then generate revenue by providing premium features like advanced analytics, more storage, or additional integration options. By starting free, users can grow dependent on the tool and are more likely to upgrade as their needs become more complex.
4. Creative Tools Platforms: Platforms that offer free access to basic design tools can appeal to a wide range of users, from hobbyists to professionals. Revenue can then be generated through the sale of premium assets, advanced editing features, or collaboration tools. This approach allows users to become familiar and comfortable with the platform before committing financially.
5. Financial Management Services: Free financial tracking and basic budgeting tools can help users get a handle on their finances. The platform could then charge for personalized financial advice, investment management services, or integration with other financial institutions. By providing essential services for free, users are more likely to trust the platform with more advanced, paid services.