Background
Ship.Cars runs a two-sided marketplace: shippers, such as car dealers and auctions, post cars that need moving (job offers), and carriers, the trucking companies that haul them, bid to take them. Carriers also have software to run their orders for free, as a means to penetrate the market and grow our share.
The software was funded by the holding company’s investors, and that was never meant to last. We had to show that our products could make the company profitable. Free had a second cost: carriers couldn’t see how we made money, and some found that suspicious. Even the smallest subscription would've made more sense to them.
The problem
Four things limited how we could charge.
Anything that kept carriers away from the marketplace would also leave shippers’ cars waiting.
We had no sales or marketing team, so the plans had to sell themselves inside the product.
Competitors’ software was more mature, so charging more than they did for less would make no sense to a carrier.
We had several cohorts with distinct needs, usage patterns, and volume, so a single pricing model couldn't suit them all.
Options we considered
The initial obvious model was per seat, which was the most popular among competitors; however, we discovered that:
users could exploit the model by sharing their accounts. We could have closed some loopholes, but that was estimated as a big lift at the time;
our carriers don't keep their list of drivers up to date, and we didn't want to charge them for people who no longer worked, leading to refund requests and disputes.
What we built
After extensive research, interviews, and surveys, we have opted for a freemium model to keep the marketplace accessible for everyone, and only charge carriers who like the software enough to add their own orders to it. For them, we have introduced two options in the beginning:
Usage-based plan where a carrier would pay only for the drivers used within the billing period.
Fixed-rate plan. For carriers looking for a predicable billing and larger fleets looking for better rates.
Add-on infrastructure for features via 3rd party integrations.
Coupon codes for various campaigns.
How did it go
We launched a communication campaign, sending a few emails and in-app messages to warn the carriers. When subscriptions were enforced, we offered a generous coupon for their first three months to anyone who had signed up within the first 30 days. Nevertheless, some acted surprised, and sought a better deal, which we granted.
Within the first 90 days, we have converted 119% of our initial target.
What happened next
In time, we did several experiments with various success:
We have put more features behind a paywall, such as early access to new loads, private loads, custom order fields and reports. This improved the perceived value of our paid plans without adding stress for the other side of the marketplace.
We have tested pre-paid yearly plan. On paper, it made sense, since for many carriers the business was seasonal, and demand was fluctuating. It didn't stick.
We have added more 3rd party integrations, such as texting service, AI damage inspections, AI voice agents, etc.
We noticed that we struggle to convert carriers with many drivers but low usage. They could not justify paying full price for handful of orders. So we added a second metered plan which billed for the total number of orders, not the unique drivers used, making things fair for everyone.
What would I do differently next time
One thing I can share here is that providing software for free without making it clear who funds the show makes it harder for users to build trust. I'd put certain non-critical features behind a paywall as early as possible.
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