In our desperate attempts to get early users and feedback, we’re often tempted to give deep discounts or free trials. Doing so is easy to justify, especially when new customers are family and friends who are basically doing us a favor.
As tempting as it is, giving away the product for free is a bad idea for SAAS (Software As A Service) businesses.
Money talks. It speaks volumes.
When customers first pay you, you get validation that your marketing works. If they keep paying, then you know your product works. You get better feedback from paying customers because they’ve already committed money and time to you. There’s very little B.S. because if you can’t solve their problem they’ll stop paying you.
Paying is an important part of the user experience.
Sending receipts, letting customers upgrade / downgrade accounts, handling delinquent accounts are all aspects of your service that require time, attention, and iteration.
Get something in return.
Whether you’re giving a free trial or a deep discount, get something in return. Ask the customer to Tweet about your service, for introductions to new customers, or the right to use their name or logo on your client list.
If you must give it away for free, at least set expectations.
Take the credit card up front and let the customer know that, upon the end of the free trial, they’ll be charged. Getting the card up front greatly increases your chances of charging that customer later and forces your customer to put a value on your service.