One of the biggest growth levers at Lovable is giving our product away for free.
Yep, Lovable is a PLG company. Most of our revenue comes in self-serve. We also have an amazing sales team, but our main motion is still very bottom-up. Prosumers, founders, people building personal projects, and a surprisingly large number of people using Lovable inside companies are still just swiping their credit card.
And yeah, we’re an AI product, so every time someone uses Lovable, it costs us actual money. But a huge part of our growth strategy is still based on giving the product away for free.
I know. Somewhere, a finance person just felt a disturbance in the force. Because AI made everyone panic about gross margin, and in response a bunch of companies are hiding the exact thing customers need to experience before they’ll pay.
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AI makes this even more important
The way we all think about product giveaways needs a refresh because the OG strategies were built during the SaaS era, and cloud-based software is unique in being super cheap to scale. We were all happily running around with 80-90% gross margins. Giving away extra seats (which usually cost, like, pennies in server costs?) wasn’t exactly going to send the CFO into cardiac arrest.
But then along came AI, which started destroying those beautiful margins. Depending on the product and model, you could have 0 margin, or even have negative margins. Even after optimizing things, you’re doing an amazing job if you’re getting over 40%. So of course companies responded by trying to protect those margins. AI functionality went into the highest-priced plan, or became an add-on, or (my personal fav) got locked inside Enterprise where majority of your user base could admire it from afar.
Because how dare you give something away when it costs money? Math needs to math!
This is one of the biggest monetization mistakes companies are making with AI right now.
Why? Well, for one, you’re literally blocking users from experiencing your product’s main value.
AI is still pretty new, so most people don’t really get what it can do for them until they use it. Even if someone describes it (and I know your marketing team is working overtime here), it’s super hard to understand the value until we experience it ourselves.
(Also, don’t you think all most of the marketing is kinda saying the same thing? Some version of “built for the AI era,” “AI-native,” “agentic,” “supercharge,” “at scale,” “focus on what matters,” and anything involving “redefining what’s possible.” Meh)
But please remember, your users are making a simple calculation: The perceived value needs to be higher than the price you’re asking them to pay. And by the way, that ‘price’ isn’t just dollars. It’s also the time and effort it takes to set the thing up, learn it, convince coworkers to use it, and a million other things that are usually required to get to an actually get value out of a product.
Putting AI behind a monetization wall before they’ve “redefined what’s possible” is asking them to pay for something they don’t understand yet.
Think of it as marketing spend
When your finance team hears about wanting to give away AI product usage away, they immediately see it as a giant cost center that’s going to destroy your margins.
Our whole point at Lovable is to reverse this:
I think about the cost of giving away free product usage as part of our acquisition spend. Which means it has to compete with every other place we could spend our marketing dollars.
We generally apply a 3-month payback threshold to our free acquisition strategies. If I give someone $X worth of Lovable, how quickly do I make that money back based on conversion into paid accounts, retention, renewal, and expansion?
Then I compare that against other acquisition channels.
Most people think the 2 options are: ‘give the product away vs. keep the money.’ But the actual alternative is usually ‘give the product to prospective customers vs. spend multiple times more money trying to acquire those same customers through traditional marketing channels.’
I’d rather make our users richer than Google. (No offense, Google, we still spend plenty of money with you.) But if our product can acquire customers itself and sell itself, we would obviously rather invest there and create more competitively defensible growth machine.
Plus, this approach gives you a chance to engage and monetize customers even if it doesn’t work out the first time.
Think about all the users you have that tried your product, but didn’t fully convert. With this approach, at least they’re in your system and you have their contact info, so you have a chance of resurrecting them. If they’re coming in through paid ads, you only get one shot. If they don’t convert then, they’re never coming back (unless you pay the same amount of money in the future to hit them with ads again.
Also, remember: even companies selling physical goods with real costs always do trials, giveaways, and samples. All.The.Time. SaaS has just gotten spoiled rotten.
(Side note: I know some people will discount this, like, ‘Oh, you can only do this and say all of this because you’re VC-funded and Lovable just raised $400M.’ But I’d actually say that if you evaluate it very strictly from a payback perspective, every growth channel or tactic has a cost. Paid is obvious and finance may complain about giving away tokens, but even the ‘free’ growth activities have a cost because you still need to hire people to execute against them. So yeah, VC money means that we can do this a lot faster, but every company should consider this channel as a way to grow in a smart, efficient way.)
Show them the magic
I’ve written a lot about freemium before, so I’m not going to turn this into another freemium manifesto. The most important thing is simple: give away enough of your product for someone to reach the ‘oh shit, I can’t believe this is happening’ moment.
For us, that moment is the first generation - telling Lovable, ‘Build me a cool app that compares the sizes of different dinosaurs’ (or whatever) and watching it appear on your screen. We strive to make this experience free by giving users 5 daily credits (10 on the first day), capped at 30 per month.
That first generation is everything for us. We’re always working to make every generation great, duh, but that first one is super important because it’s when someone gets to experience translating something from their brain into working code on their screen.
And if your product requires multiple uses to really understand, make sure to factor that in. One great first session might not be enough. This is why our free credits refresh daily. Maybe you weren’t convinced enough to pay on day one, but tomorrow you can come back, make another edit, see a little more value, and build a habit.
I cannot take credit for this strategy because it existed before I joined Lovable, which is deeply inconvenient because it works extremely well.
Our free-to-paid conversion typically lands somewhere around 5-10%, and that conversion is what ultimately makes the payback math work.
But hey, just remember that your product has to really sell itself :)
Work with others to give your product away
Remember that freemium is an entire system, not just a price point. To make this work, we’ve been offering free product usage through a bunch of different programs.
1. Partner giveaways - borrow someone else’s audience
I’d actually never done it at this scale before, but it’s worked surprisingly well for Lovable.
The premise is very simple: find another company or creator whose audience overlaps strongly with your ICP, and give their audience your product for free.
For example, you can get some free Lovable through LinkedIn Premium Perks. We have offers through Lenny’s Newsletter, Revolut, this beautiful newsletter you’re reading right now, and many others.
The partner gets value from being able to give away your product, and you don’t have to compete in the auction for attention that exists on Google, Meta, LinkedIn, and basically any ad platform.
Plus, your distribution is more efficient because you already know you have the right audience. If the partner has an extremely strong ICP match, we can get pretty aggressive with the offer - several months or even a year. That sounds insane until you look at the conversion rates into paid accounts, which can be up to 40-60%.
Again: the math needs to math. After viewing this through a payback lens, I am now a very big believer in this channel.
(Emily Kramer wrote a great guest post for Lenny about this last year: Ecosystem is the next big growth channel.)
2. Community and events - let other people activate your users
Our Lovable hackathons have been going gangbusters and are making me think that product-focused events are underrated. Not only do the champions and organizers get to be in the spotlight, but everyone who attends is set up to have a perfect onboarding experience.
Just think about it: People are trying the product out with a specific time constraint, surrounded by other people using it and also people to answer questions or help them get unstuck. And now they know a bunch of people in their office (or wherever) who they can talk about their new project with. This is pretty much an ideal environment to get people to not only use the product once, but to get them to stick around and keep using it.
Oh, and this has been an amazing enterprise outreach program too. Instead of doing a demo (bleh), we help enterprises organize internal hackathons on Lovable so their teams can actually experience the magic.
3. Startup programs - get into the stack before there’s a stack
If you want startups to use your product, give it to ‘em for free.
I’ve seen this work across many companies and categories. MongoDB has done it. I’ve heard similar examples from MathWorks. At Amplitude, our startup program was a major driver of sales pipeline, not just self-serve revenue.
I wrote a whole article busting myths about this approach, but the big one is approaching this as a tactic to drive short-term revenue. You can’t expect these companies to start really paying off right away, but it’s a great opportunity to get your product built into their core infrastructure, so that your contract with them will grow as they do. If you’re willing to wait, that’s a lot more efficient than trying to break into a hot company with an enterprise sales motion.
The post-graduation conversion I’ve seen from strong startup programs can be in the 40-60% range. If your product becomes more valuable as the company grows, I don’t understand why you wouldn’t want to get there early.
Before you start throwing free product everywhere...
There are a few guardrails because, unfortunately, ‘give away your product’ can very quickly become ‘accidentally sponsor the internet.’
First, measure payback. Giving away the product should not be treated as some vague brand investment where everyone nods thoughtfully and nobody knows whether it worked. Assign a dollar value to what you’re giving away, measure conversion, retention, renewal, and expansion, and compare the impact against your other acquisition channels. We use a 3-month payback threshold. Yours might be different, but you need one.
Second, don’t use generic coupon codes. They always leak or get shared to people who aren’t supposed to have them. They end up on coupon sites. Someone posts them somewhere they absolutely were not supposed to be posted, and then your carefully designed acquisition strategy turns into a charitable contribution to strangers on the internet. Always try to use unique single use redemption codes tied to individual users or eligibility.
Third, adjust your offers per market. Make sure you understand the economics in different regions, because they vary wildly. Like, if conversion or monetization changes a lot by country or region, you probably need geo restrictions. Again, the math needs to math. ‘Free’ doesn’t mean ‘we don’t care about unit economics anymore.’
And fourth, actually make it free. I’m a much bigger believer in giving someone a smaller amount of product usage for $0 than giving them more access for 20% off. Even if I can easily afford a few dollars, there is a big psychological difference between ‘try this’ and ‘buy this, but slightly cheaper.’ The second you ask for money, I need to make a purchase decision. When something is actually free, it removes that decision and lets me focus on whether your product is actually useful.
And yeah, people will steal from you 😠
Any valuable offer is gonna attract fraud. It sucks, but it always happens. There’s no magical strategy where you give stuff away on the internet and everyone politely takes only what they’re supposed to.
You need someone responsible for this.
At Lovable, our team builds systems to detect fraud, reclaim credits, and ban bad actors. These systems can catch and fix a lot, but you still need to assume that someone, somewhere, is currently trying to figure out how to exploit whatever generous thing you just launched.
I learned this personally through this newsletter. As some of you have seen, I started offering free Lovable credits to every paid subscriber, which I thought was a nice thing to do. But then…. one dude found a loophole, generated 600+ coupons, and started reselling them.
When I confronted him, I was expecting at least some version of ‘Oh shit, sorry.’
Nope.
Apparently stealing 600 coupons and reselling them was simply another entrepreneurial path I had failed to adequately appreciate.
This is annoying. It makes everything more expensive and more difficult for everybody. So, yeah, you’ll need fraud detection, eligibility rules, unique codes, monitoring, and remediation. And people will still occasionally find a way around all of it.
But even with all of that, it’s still definitely worth it.
Freemium forever
If you’ve done PLG in the past and someone (probably in finance) convinced you that AI killed freemium, go tell ‘em they were wrong.
Yeah, the stakes are higher because giving away product usage has an obvious and immediate cost to it. But if you want to invest in growth, I’ve seen for a fact that the cost of giving those tokens away can be much more efficient at driving customers and conversions and revenue than the cost of the more obvious marketing channels.
And as a bonus: You’ll have a big advantage if you can get your act together on this, quick. Right now, in this world where there’s very little feature differentiation between products, all the marketing sounds the same, and everyone’s saying the same thing. There’s so much damn AI confidence theater. So you’re gonna need to win customers over with your experience… and this whole approach works because it’s stripping out all the obstacles to getting people into your product experience, asap. If you’re looking to acquire customers in this extremely competitive market, give them your product and let them try it for free.
Edited by Jonathan Yagel.
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Great thoughts as always! Thank you for sharing your experience. That email from the guy who farmed 600 codes is insane. It feels so foreign, but it's good to remember there are a substantial amount of people out there who see fraud as a job.
100% agree. Freemium well executed is the best marketing spend for a startup!