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Strategystandard
A competitor just launched a free version of your paid product. How do you respond?
How to approach it
Do not react on instinct. First find out who the free version attracts and whether your paying customers are actually switching.
How a strong answer opens
“I wouldn't react on instinct. First I'd like to know who the free version attracts and whether our paying customers are actually switching.”
Outline of a strong answer
Try answering out loud for a few minutes before you open this.
- Understand the competitor's offer and likely motives
- Check data: churn, trials, win and loss reasons
- Segment customers by risk of switching
- Options: match, launch a limited free tier, stress premium value, or wait
- Weigh revenue at risk against cost of each option
- Recommend a response and metrics to watch
Where this question usually goes wrong
Matching the free version immediately and giving away revenue before checking whether paying customers are leaving.
Learn the method
Worked cases 1 to 3 in Module 5, Product strategy.
The full kit has worked answers in full, start to finish, for every round type. $129 once.
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