Even if the math was fixed it is bullshit because the numbers are made up.
I can think of a few companies who lost out on my business because I was able to test out their competitor, for free, before handing over all of my billing info. If someone wants to know the impact of killing their free plans, then they can easily test it.
Each company has its own math formula for what works, and that formula will change, if not by the day, then by the month, as the market evolves. In the case of most start ups, it is going to change very rapidly.
My rule: offer just enough to free so a customer can see the value, but not enough that they can do "damage" (e.g. derive a massive amount of sustained value to their own business.)
The best use of a 'free' pricing tier is for an extremely-limited version of your product - one that someone can't use on a regular basis and get what they need out of it. You have to stack your features in tiers that encourage users to upgrade in order to gain the features/scale/whatnot they need to gain sustained value from your product.
If you're giving away the basic plan product for free, you stand a lackluster chance of converting free users to paying users. But if you look at the free tier as part of the conversion funnel, it becomes a useful part of the path on the way to gaining more and more paying customers.
(The big difference is that a lot of users - myself included - are wary of free trials. But we'll definitely go ahead and sign up for something that doesn't cost us anything, with the intention of kicking the tires. And once we've signed up, we're now prime candidates for continued encouragement to upgrade.)
I can think of a few companies who lost out on my business because I was able to test out their competitor, for free, before handing over all of my billing info. If someone wants to know the impact of killing their free plans, then they can easily test it.
Each company has its own math formula for what works, and that formula will change, if not by the day, then by the month, as the market evolves. In the case of most start ups, it is going to change very rapidly.
My rule: offer just enough to free so a customer can see the value, but not enough that they can do "damage" (e.g. derive a massive amount of sustained value to their own business.)