Selling Software: Why Free Trials Aren't

About This Blog

This site is for  entrepreneurs.  A full RSS feed to the articles is available.  Please subscribe so we know you're out there.  If you need more convincing, learn more about the site.

Community

Google+

And, you can find me on Google+

Connect on Twitter

Get Articles By Email

Your email:

Google

Blog Navigator

Navigate By : 
[Article Index]

Questions about startups?

If you have questions about startups, you can find me and a bunch of other startup fanatics on the free Q&A website:

Answers.OnStartups.com

Subscribe to Updates

 

30,000+ subscribers can't all be wrong.  Subscribe to the OnStartups.com RSS feed.

Follow me on LinkedIn

OnStartups

Current Articles | RSS Feed RSS Feed

Selling Software: Why Free Trials Aren't

 


Some time ago, I wrote an article titled “Startup Tips for Enterprise Software Pricing”.  If you’re selling software to big companies, it’s likely worth a quick read.  When writing the article, I left a note to myself that I should revisit the issue of free trials and pilot projects.  I’ll look at pilot projects (for larger deals) next week, but this time, will explore the free trial a bit more.

Software Startups And The Free Trial
 
  1. Shifting Customer Risk:  One of the biggest motivations for offering a free trial to your product is the obvious one.  It reduces the risk for the customer to determine if your software meets their needs.  The idea is get more prospective customers to try your product, with the hope that this generates more sales.  There’s really nothing to argue here.  A free trial, in many categories of software is almost a requirement.   What you are trying to do is reduce the cost to the customer so that the potential benefit of your product outweighs the total cost of trying out your product.  But, it’s not that simple.  Simply making a “free trial” (for some period of time) available is not always sufficient to overcome this barrier.    We’ll look at reasons why.

  1. Time To Actual Enjoyment:  Often the actual price of your software is only a fraction of the actual cost a customer incurs to try your product.  Lets say you are charging $499 for some business application.  You give away a free trial of your product (downloadable via the web, of course).  However, it takes 4+ hours for them to download, register/activate, learn and play with your product before they can get to see the enjoyment/benefit they were promised.  In this case, the customer is spending more (in terms of time) than the cost of your product.  Just because you have a free trial doesn’t mean the customer is not taking risk.  The free trial is not always “free” from a customer’s perspective.

  1. Your Cost To Deliver Enjoyment:  In order to get customers to enjoy your product, how much of your company/s time/resources will be consumed (on average)?  Chances are, to deliver a great “free trial” experience (and increase the odds that more customers buy), you’re going to have to expend resources. Some of the cost is upfront (designing the “trial experience” from end to end) and some of it is after a customer has committed to try (like making support available).  Obviously, you should try and drive this cost as low as possible – but be careful that in doing so, you are not decreasing the odds dramatically that more customers will buy.  Offering free, human support to your trial customers may cost you money, but not doing so may prevent many customers from actually reaching that point of actual enjoyment.

  1. Intrusion Risk:  In today’s world of malware of all sorts, including both intentional malware (spyware, viruses etc.) and unintentional malware (the product uninstallation doesn’t work and hoses the customer system sometimes) customers are often weary of installing anything.  Technical folks don’t worry about this as much (because we have our ways of protecting ourselves and getting ourselves out of a mess if its necessary).  But, normal users don’t have this degree of confidence.  As such, if they suspect that your free trial may fall into one of the malware categories, there is a “cost” to them for taking that risk.  So, you need to make it abundantly clear to them that this is a low risk.  Ways to do this are to make them aware that installation (and uninstallation) will only take minutes.  That there are actually people working in your company (so if they do have problems, you’ll help them out).  Put yourself in the customer’s shoes and think of ways to ease their mind on this risk.    (Of course, if you have a product that doesn’t require installing any bits on the customer’s computer, that takes away a lot of this headache).

  1. Lock-In Risk:  Many of the free trials out there are “limited” versions of products.  I’ve actually worked with trial versions of products that didn’t allow “saving” a user’s work.  What I would do here is to make your trial “full featured”.  To really win over the customer, also provide a way to “get their data out” (even after the trial has expired).  For example, if you’re providing some email campaign management or other database-centric application (hosted or installed), make it easy for the customers to get their work out of your software (even if they decide not to become a customer).  This creates goodwill. 

  1. Price Ambiguity:  If you are going to offer a free trial, you really need to make your pricing transparent.  Don’t hide behind sales reps and pricing proposals sent to customers after they have tried the software.  Potential customers will be worried that if they try your software, if it does actually work and bring value for them, they’re going to fall in love with it and perhaps the price still doesn’t fit.  In fact, by being closed about your pricing, many customers will assume (sometimes rightly) that the free trial is just to lure them in, get them to fall in love with the product and then be “sold” when you, the software company have the most leverage.   This is the old car dealers trick (“I’m sure we can work out a price that’s just right for you, but why not take this baby for a test drive and first see if you like it.”)


Overall, I’m a big fan of the free trial.  It puts a lot of pressure on you to deliver value since you are assuming a large portion of risk.  An incidental benefit of the free trial (other than more customers) is that it will likely make your product experience better.  If your product sucks and nobody can figure out how to enjoy it, the free trial will make that painfully obvious very early in the game.  You won’t get many “conversions” to paying customers. 


Posted by Dharmesh Shah on Fri, Sep 22, 2006

COMMENTS

One good example of free trial support I saw recently was from webstudio.com. (not affiliated in any way.) Their 30 day free trial was backed with well-targeted, well-written email reminders of trial expiration and usage tips – getting started , using features, common questions etc. I see these benefits from this approach:

- Reminds the prospect to try and use the software
- “Almost-free” training – training and marketing are closely related.
- Creates a sense of presence - the company is real with real people.
- Prevents some simple support calls on the free trial and early support once a purchase is made.
- Soft-sell – features backed by how to’s
- Cross-sell of other materials, options and support, not for immediate purchase, but emphasizing that there is more to the product than just what is being tried now. This also adds to the sense of presence.

There are certainly costs to create these materials but the ongoing cost is near zero.

/andrew

posted on Friday, September 22, 2006 at 11:31 AM by Andrew Lavers


This is an unfair representation. If I'm selecting any kind of software or service, I need to try it out or at least have a pretty thorough demonstration. That takes time, whichever way you cut it.

posted on Friday, September 22, 2006 at 12:33 PM by Dennis Howlett


What do you propose as an alternative to a free trial? We didn't offer one for a long time, but lately have caved and started providing one. We found that the "just buy it and then we'll refund your money if you dont like it" route wasn't quite as nice.

posted on Friday, September 22, 2006 at 12:55 PM by Phil


I'll have to disagree about making the trial fully featured. The purprose of the trial is what the name says, to 'try it out'. If you make it fully featured and they can save their work etc, they would hardly have any incentive to buy it left. Disabling saving will give them a huge incentive for buying.

But i agree with making it easy to get the data out. It won't lose you sales and creates a nice impression of the product.

posted on Friday, September 22, 2006 at 6:57 PM by Ali


Nice Article. I wish you would of touched on requiring users to sign up to try the trial. While some people might say you should make users signup for trials, again we just don't want anyone to download the software. What's the take on this?

posted on Saturday, September 23, 2006 at 12:46 AM by LaTesha Burroughs


This article i believe to be true for products more than solutions. Can we have views on how to use this ploy of "free trials" when you want to sell software as a service. i am talking about web application for example a content management system or any information management solution.

posted on Saturday, September 23, 2006 at 2:23 AM by Amit Desai


This is similar to the arguments about open source -- the true cost of a product, as pointed out, often far exceed the license costs.

One problem I have seen with free trials is that they tend to self-select for those that do not have budget. If you have budget and a product comes highly recommended, is used by other companies in your market, seems to meet a real need, than paying some money upfront some amount for a production trial in order to receive support, direction, and so forth may actually LOWER the costs of the trial to you.

Generally it is better to start a sales process with the leadership that has budget and then work from there, which would eliminate the need for many free trials. On the other hand, if the market expects free trials and we are getting requests for them from the field level of organizations -- potential users -- then we will fullfill them in some circumstances.

posted on Sunday, September 24, 2006 at 3:38 PM by Evan Powell


Watch out for PC-magazines which will promote your software through an older free version for there cover disk. Sales will drop 90% and your software product will become worthless.

posted on Tuesday, October 10, 2006 at 12:39 AM by Daniel Jame


Very interesting perspective and very relevant for products with large value. check out my blog http://blog.nrichsoft.in/2006/11/26/evaluation-copy-a-boon-or-a-pain/ for a contrarian view.
It is nice to see another blog for Software entrepreneurs. I am writing on Software products and the various dimensions of that business in my blog
http://blog.nrichsoft.in

posted on Thursday, December 14, 2006 at 8:56 PM by Badri


Interesting read. I have considered some similar issues and more at my blog site: http://www.sell-software-online-free.com/introduction/writing-a-shareware/ 
 
 
 
I am sure it will be of help to some people.

posted on Sunday, March 08, 2009 at 6:00 AM by Misco


Interesting read. I have considered some similar issues and more at my blog site: < a href="http://www.sell-software-online-free.com/introduction/writing-a-shareware/">here 
 
 
 
I am sure it will be of help to some people.

posted on Sunday, March 08, 2009 at 6:04 AM by Misco


Good points and now has me thinking my own freeware strategy from the customers viewpoint. Very helpful. 
 
 
 
I will say though, that trials and especially freeware should also be viewed as a marketing tool. Its also a branding vehicle if used correctly. It all dependends on what you are trying to accomplish. For example, giving away a smaller, "liter" version of something may help the sales of the larger version. But you could also develop a completely different freeware product as a tool to drive interest in a cross-sell to the business as a whole, or expose users to your brand as they use these smaller viral products. A good marketer would be able to understand all that....but just thought I would throw that out there.

posted on Sunday, April 26, 2009 at 2:16 AM by Website Photo Gallery Guy


Good article, when I created www.xpelo.com as the world's first banned link finder it's offered as a 100% Free 14-day Trial with no restrictions on use whatsoever.  
 
I was able to offer the Free Trial for XPELO® using a permissions based CRM that should anyone cancel their free trial within the 14 day period, the customer will not be allowed back into using the software even though the software is all client-side.  
 
Chances are though since the software is the ONLY software for SEO that identifies, locates, and validates every link on any website (world's first banned link finder) that customers continually keep using the software to constantly check their websites every week. 
 
So far the feedback on the offer and actual API software has been excellent, we couldn't be happier!

posted on Monday, August 17, 2009 at 3:08 PM by Matthew Heady


Comments have been closed for this article.