Why freemium pricing is the secret to $4k MRR for my productized service

Hello! What's your background, and what are you working on?

My name is Jovan Babovic, and I'm a brand designer from Belgrade, Serbia. I've been working on a productized logo design agency for tech founders, called Logolix Free and Logolix Pro, for almost three years now.

Today Logolix is making around $3,500/month as a one-man-band.

What motivated you to get started with Logolix?

From 2012 to 2017 I spent a lot of time looking for clients on freelancing websites, and participating in design contests. It seemed like the competition on these websites was rapidly increasing, and it was becoming harder to get new gigs. That's when I decided to ditch the freelancing websites and look for bigger clients elsewhere. I saw a few agencies productizing their services and thought I should give it a go.

Logo design has always been my passion, and I really enjoy working on new identities for companies. There was a big problem though: companies only needed a new look once every few years. When I successfully completed a project I was always presented with the task of looking for a new client. I had to think of a way to create a steady stream of leads.

A few months of overanalyzing and planning went by, and I came up with the idea to give away some of my designs for free. In logo design projects, every client is presented with three to five logo ideas to choose from. They pick the winner, but the other designs get buried somewhere on my computer.

I figured there were a lot of people who were just testing their ideas and didn't want to spend money on getting a decent looking logo. So I gave them a place to test those ideas for free, in the hopes that they would come back and order a custom design later.

That's exactly what happened and I've been getting a steady stream of leads for three years now without doing any additional marketing.

What went into building the initial product?

The initial product was created within two weeks. Other than my time, the cost to build this was very minimal. Purchasing the domain, hosting, and a theme cost me around $100. I'm not a developer by any means, but I had some experience customizing the themes from Themeforest.

These are the steps I took in those first two weeks:

1. Sort through all of the unused logos, choose the best ones and package them for easy download

2. Write the content for the landing page and create three different pricing packages

3. Customize the theme to match Logolix branding and add all of the logos

4. Create the design brief and integrate Typeform into the website.

5. Upload the website and make sure everything is functioning properly (Google Analytics, Typeform, Download feature, Contact form, etc.)

6. Prepare the images and copy to launch on Product Hunt

7. Launch!

That's pretty much it. I didn't want to spend too much time on the MVP. The main focus was on the back end of the business and delivering exceptional service.

What's your tech stack?

Since I'm a designer who occasionally dabbles in front-end development, I decided to keep the tech stack as simple as possible. The website would serve as a lead generation tool only, so there wasn't a reason to complicate it.

As I mentioned, the initial product was built with a $20 theme from Themeforest. A few hours of customizing it were enough to launch the MVP.

The landing page was built with HTML/CSS/Javascript. Although there were quite a few design and structure changes, the tech stack stayed the same all the way through.

How have you attracted users and grown Logolix?

I remember that I saw a SaaS marketing expert writing about the importance of freemiums in the software world, saying that people wanted to try something before they bought it. That was what made me first realize that the founders didn't want to spend money on a new logo when just testing their ideas, which created my original concept.

I started researching where tech founders spent their time online, and that was when I first heard about Product Hunt. I saw that there were people launching all sorts of products, but that the logo design category didn't have much competition.

A few days after I launched the website, I created a product page on Product Hunt. I went to bed that night and thought it would be great if I could get a few clients from it. When I woke up I saw 11 new inquiries and Logolix already had around 780 upvotes, which made it a #1 Product of the day.

The launch happened on June 11th, 2017. By the end of that month, Logolix was visited by 12,000 people. The traffic slowly died off in the upcoming months. However, over the period of the next three years, there have been around 1,200 visitors each month on average.

I'm not sure I can give you much advice on any of the other marketing tactics, since I didn't do any additional marketing from the start. Referrals have been the biggest source of new clients. Posting on Product Hunt, BetaList, and a few other directory websites turned out to be a great time investment. They're bringing in leads to this day, three years later.

What's your business model, and how have you grown your revenue?

When I launched I had two ways of making money. The first was by selling exclusive logos and the second was by offering three different packages for custom designs. Exclusive logos were the best ones, the ones I didn't want to give away for free, but instead wanted to sell with exclusive ownership rights. This turned out to be a bad idea because no one purchased them. Later on I started giving away those for free as well.

Deciding on pricing is always tough. Since I didn't have a stable income at the time I decided to make Logolix very affordable to bring in just a few new clients. Later on I realized that I didn't value my skills enough to price them higher. It took a lot of trial and error to find a sweet spot that allows me to work with clients who know the value of getting an amazing brand identity for their business.

Some people come to Logolix and immediately decide that they want a custom solution, while most people just download the free version so they can test their ideas. A lot of those people who downloaded the free ones came back later on and purchased the custom solution.

Invoicing those clients has never been a problem. PayPal has been my go-to for billing. I wish Stripe was available in my country. Then it would be easy to integrate it with Typeform and accept the payments right away.

Today Logolix is bringing in around $3,500 each month with the profit margins of around 90%. It's still a one-man-band and I don't plan on scaling it any further. This is a side project, since I started a digital design agency a few years ago. I also have something big coming up that I'll share with the IH community when it's time.

MonthRevenueJan '202450Feb '203150Mar '203900Apr '204650May '204850Jun '202550Jul '203150Aug '203900

I'm curious about what got you into design and designing logos in the first place, before Logolix. Can you tell us more about that?

Way back I used to play a video game called Counter-Strike. My gaming team needed a new logo, so I decided to do some research and try to create one. I was immediately drawn to the design field as soon as I saw what could be done.

A few weeks passed and I stumbled upon a website called 99designs where designers got paid if they won a design competition. I thought it was a great way to get a side income, so I started devouring logo design tutorials and improving my skills until I won my first competition.

That was the spark that led me to create over 1,200 logos on that website, and later on helped me start my own businesses!

What are your goals for the future?

This started off as a side hustle, and I have no intention of scaling it. It only provides me with additional income and allows me to work on projects that I really enjoy. I built great business relationships with this service that later on allowed me to get hired for much bigger projects.

With that being said, it would be nice if we could hit $5,000 MRR by the end of the year. I plan on writing a few guest blog posts and see where that could take Logolix.

Most of my bigger goals lay in my upcoming project. I plan on launching a unique productized service soon, and will be starting a thread on Indie Hackers.

What are the biggest challenges you've faced and the obstacles you've overcome?

The first mistake I made was getting too excited after the launch. After checking my inbox and looking at those 12 orders, I thought I was on the moon. From having only one to three clients per month to receiving 12 inquiries in a day turned out to be a huge burden.

At the time I was very scared about delegating and finding a designer that matches my style of work. Because of that, I was forced to decline six of those inquiries and choose five that had the biggest earning potential. Big mistake.

If I'd found another designer back then and took all of the projects that kept pouring in, perhaps I could have scaled Logolix and made it into something bigger than what it is today.

My second mistake was deciding to redesign my landing page several times for no apparent reason. Two of those redesigns were very unsuccessful, resulting in a sharp bounce rate growth. I finally managed to bring it back to normal with a recent re-design. Lesson: don't make huge changes if something is already working, just because you think it will work even better. Follow the data and try to slowly improve your product step-by-step.

You already had a career as a designer, but clearly finding additional clients was an ongoing struggle. What were the stakes for you, personal, professional, or otherwise?

When I was 18 years old, I got a basketball scholarship and went abroad to study at one Canadian university. Didn't know anyone there and had to figure it out by myself since the time I landed.

I soon found out that my living expenses would be almost three times higher than in my home country. Renting a room, paying for utilities and food can get pretty expensive out there. During the summer break, most of the students would go home to visit their family, but I was "forced" to stay in Canada and work in order to save up some cash for next year. My freelance design career just didn't provide me enough income at that point.

Soon, I found a few work opportunities that ate up my time but provided me with a good income. Jobs like wall painting, lawn care, utility work, and gardening to name a few. Every morning I woke up, I didn't like the person I saw in the mirror. Not that there is anything wrong with those jobs, I just wasn't fulfilled by any means. As time passed, I trained myself to use that as fuel to expand my skills and learn more about business, marketing, and design in my free time.

The first few months were spent jumping from one idea to another, the typical shiny object syndrome. When I decided to focus on one thing only, creating amazing logos, I started seeing different opportunities to grow and expand my freelance career. Logolix was the first idea that took off and allowed me to devote to design full time. That was the spark that propelled my career and opened up so many new doors that I didn't even know existed.

I strongly believe that if Logolix didn't take off something else would because I stayed persistent. That is another great lesson for anyone looking for those new doors.

Have you found anything particularly helpful or advantageous?

I can't pinpoint specific advice that helped me, but immersing myself in digital marketing content and the SaaS world gave me a lot of insights. I wouldn't have even thought of promoting my logos by giving them away for free if there wasn't a SaaS article about freemiums.

The best decision I made was just doing it. I used to ponder over ideas for months and planning everything in my head until I jumped to the next shiny business idea.

What does your workspace look like? At home, at an office or a workspace, devoted more to design or more to running a business?

I'm one of those people who will find every sort of excuse to procrastinate. It seems like there's always something in the way of actually sitting down and doing the work.

Up until last year, I wasn't able to stay productive at home. Only once I decided to rent an office space and separate "work" from "home" was I able to become consistent. It was a scary moment to commit to renting a small office space, but I never looked back.

Nowadays I spend most of my time running an agency and a few side projects. When some big projects come up I enjoy getting my hands dirty, but I try to outsource most of the lower-paid tasks in order to be able to focus on the bigger picture.

What's your advice for indie hackers who are just starting out?

I know that it sounds corny and you've probably heard it multiple times, but just start something. You don't learn until you launch and nothing will be as you planned. You might fail bad, but just take it as a lesson. You might also succeed beyond your wildest predictions.

Everything is about the mindset, and this cannot be overstated. I used to be a wantrepreneur and never thought that I could somehow scale my skills beyond selling $200 logos. Start believing in yourself and just follow what people on the next level are doing. Don't copy, but emulate.

One more piece of advice for anyone in the creative profession is to read Steven Pressfield's work. I used to constantly battle with procrastination until his books showed me a way out. If you struggle to start a new project or wait until the deadline to complete a task, resistance is beating you. You have to learn how to overcome it if you want to achieve something great. Anyways, he'll explain it much better than me. Seriously, order those books today!

A few other books that I strongly recommend:

• The Millionaire Fastlane - Mj DeMarco

• The One Thing - Gary Keller

• Built to Sell - John Warrillow

• The War of Art - Steven Pressfield

• Turning Pro - Steven Pressfield

Pretty much everyone has had a very different 2020 than anyone expected! Has COVID-19 impacted your business much?

COVID-19 hasn't impacted my business much.

I have seen a very slight increase in inquiries since a lot of people are trying to start something online and they need help with branding. Other than that, not much has changed.

Where can we go to learn more?

I don't use social networks at the moment, but plan to start if one of my businesses requires social media to grow. Instead you can email me if you have any longer questions, jovan@logolix.com.

I hope you liked the article! Let me know if you have questions about the path I took with Logolix. Feel free to voice your opinion on the concept as well as the quality of the work. I'm always looking for feedback and critique.

Thank you!