How did Grammarly reach $90 million ARR? ✍🏻
The insight behind free to paid conversion.
Grammarly's annual revenue touched ~$90 million 💰
But, most users are on a free to use plan 🤔
Here's how it still makes so much revenue ⬇️
Quick context 🗓
Grammarly reviews spelling, grammar, punctuation, clarity, engagement, and delivery mistakes in english texts, detects plagiarism. All of this across chrome browser, google docs & even apple notes.
So how did this product get to $90 million revenue?
First / identifying right users 🎯
Grammarly understands it's product market fit really well. It acquires users who need to write crisp sales email, authors of books & anyone who writes or chrome to be honest.
Second / getting users to try for free 🤞🏻
If you go to Grammarly's website, it never asks for a credit card. All it has on the first fold is a big button called "Get Grammarly, it's free". It's website landing page to free plan users is mind-blowing.
Third / instant "AHA" moment delivery 🤯
Once you signup on the product, it pushes you to add it's chrome plugin. And once the chrome plugin gets activated, it starts showing you grammar mistakes & with one click you can auto correct complete sentences.
Fourth / jumping the free to paid valley ⛰
Grammarly understands it's competition. It's built in grammar check inside google docs/ notion & smartphone keyboards. And it's core pricing only hits for something delta - say - rephrasing a sentence. Something no auto-correct solution offers.
And I want to double-click on this 🎯
Every free product struggles at converting majority of it’s users into paid.
If you observe closely how the free vs paid plans are differentiated. It’s free plan solves for basic grammar, spelling while it’s paid plan rewrites complete sentences. Now, for those who spend most of their time writing important documents/ books/ emails/ assignments understand the value of word choice/ tone suggestions/ citations. This allows grammarly to cross the dead valley and convert it’s users from free to paid.
Fifth / focusing on right distribution channels 🧭
Grammarly thrives on paid marketing, period. It understands which channels to use, what is it's free to paid conversion is & what it's monthly pricing going to look like. It's customer acquisition cost to lifetime value is super healthy and is aligned to paid ads.
That was the Grammarly revenue breakdown story ✨
If you paid attention, most products fail to jump the free to paid battle. And that's where internet business models make or break it.
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