The marginal cost per customer is not that different if it's a small customer or a massive one, so it's much interesting for you to go after the big ones that will generate much more revenue. You miss out on revenue from smaller customers, but your margins are higher (and it's totally possible that the revenue from smaller customers isn't financially directly worth it, if the support costs around them are too much).

Of course that skips the bigger picture like more people knowing and using your products and being happy with them leads to more champions for them doing your sales and marketing work for you, which can create lots of revenue in the long term; but it's pretty much impossible to quantify.

Because they figure there's a bigger opportunity cost in the possibility of the big clients using cheaper tiers than in the possible lost customers who won't go for tiers at the current prices if an alternative is available.

You could always add seat limits at lower tiers, truth is that almost no company in my region is paying for Gitlab, but there are plenty that are paying for GitHub. There's also the problem with big customers, you can see it in Gitlab's case, namely they demand a lot of stuff and they have the leverage. I worked at a company like this, we couldn't stop focusing on niche custom dev for Mr Big Buck while our core offering was neglected and we stagnated.

It's really healthy for a company to have a whole spectrum of clients, from people that chip in 2-4$ per month for a minor bump in capabilities and without any support included to big companies that push for exploring new features.

In my opinion, Gitlab is a primary example of feature-creep and it will be the demise of the company.

>In my opinion, Gitlab is a primary example of feature-creep and it will be the demise of the company.

Gitlab was VC funded which means it had little choice but to take on a high risk/high reward approach. It worked fairly well since it IPOed at $12b while it's last round of funding was at under $3b. Good return for VCs. Of course the stock is down over 50% since IPO but that's someone else's problem.

In lots of VC funded companies I always miss a basic pricing for users that don't need much but don't want to use a free tier that will probably dissapear in a year or two when the VC gets nervous.