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Not sure why companies are still obsessed with obtaining millions of cheap/non-paying users? Fantastic, you've acquired an audience of people so cheap they ref

by aantix 11y ago

Not sure why companies are still obsessed with obtaining millions of cheap/non-paying users? Fantastic, you've acquired an audience of people so cheap they refuse to buy your entry level tier product.. Sounds like an awful problem. At the very least, if you're going to offer a free tier, make it a trial and capture their credit card up front. Charge it after 30 days. Make the user get serious about whether this product is for them. And in turn, it makes your company get serious as to whether this is a viable business model or not.

Karunamon 11y ago
make it a trial and capture their credit card up front. Charge it after 30 days. FWIW, I personally refuse to do business with companies that utilize this kind of flow - it feels like a scummy dark pattern, where they're banking on people to forget they've signed up and they can get at least one month's worth of charge out of it. That goes double when you can sign up online but it requires calling in (and talking to "retention" people) to cancel. "But we don't want to interrupt your service.." goes the salesman.. yeah right. If you're going the free trial route, fine, but it should require affirmative action after the trial to begin billing. You don't need my credit card until I've actually bought something from you.
- jdmichal 11y ago
  I agree. Ticking time bomb on the account is fine, and a series of triggered reminder emails should be sufficient to prevent the dead switch surprise. Asking for payment information before I even begin a free trial leads me to assume that you don't believe your product is good enough to withstand the trial period on its own merits, and you are hoping to catch me just forgetting about it. Makes me wonder what other questionable actions might be taken, especially regarding hard things like security. Does not make me feel safe at all.
- curiously 11y ago
  FWIW, I personally refuse to do business with companies that utilize this kind of flow Well, I think you know the river runs both ways, they probably want to filter out people who share that mentality, not judging your views on morality or whatever but it does not support your argument at all. If you are not willing to provide a card up front it means you don't have money to spend right there and then, and those companies probably are more interested in talking to those who have shown they are able to pay if required.
  - jeffmould 11y ago
    I understand the want to filter out people mentality, but I completely disagree with thinking that just because a person does not want to provide a credit card upfront that they are not a valid customer or don't have the money to spend. I look at it this way. Let's say I come across Acme Corporation's website. They are selling what appears to be a really cool product. I figure I will give it a try and signup for the free trial and at the same time enter my credit card info. I give it whirl, but in the middle of testing it out I get sidetracked with a phone call or whatever and forget to finish testing. I wasn't impressed enough with the little testing I had completed to go back immediately and after a couple days I completely forget I even signed up. Now 29 days later my credit card gets whacked for a $20 monthly fee. I have two choices at this point. I can file a chargeback, which isn't fair to the company. Or I can eat the cost and cancel immediately, which isn't fair to me. In my opinion, there is absolutely no reason to demand a credit card upfront for a trial. *Edited to fix a typo.
    - mokkol 11y ago
      I think almost all the companies have a X days money back guaranty
      - Karunamon 11y ago
        Which as recent FDA actions can tell us, are often worth the paper they're printed on. Sign up now, give my credit card, and to cancel I have to call a phone number which may or may not work and talk to a person who's entire reason for employment is to make it difficult for me to cancel with no assurance that anything has actually been cancelled until the next billing cycle. When I take over the world, it will be a law on pain of summary execution that any recurring billing which can be signed up for online must be cancellable online :/
    - curiously 11y ago
      Well if you can pay for a trial even better, the credit card requirement is just another step below that,the next which is a free trial with no card. Whichever they offer is valid because businesses differ. To claim requiring a card for a trial is shady is just one small irrelevant aspect for the vendor. The card requirement is a great way to filter out the less serious ones, if we miss one exception like yourself, it's no biggie, there's always someone who need the solution and willing to pay for it. The only reason where I'd be reluctant to do a card trial is if it was difficult to cancel or they didn't offer a refund if I accidentally forget. Plenty of shady people using fake cards to sign up for trial as well.
- mokkol 11y ago
  I totally understand your pain but I don't agree. We got rid of the CC on our signup (www.nusii.com). We got many more users because of that (3 to 4 times more) but we've seen that the conversion rate (trial to paid) was WAY lower. 4% instead of 40%. We don't exactly know why this is, but I think it is because the CC makes you want to try the product much more. You end up with a happier user. Our biggest mistake was getting rid of the CC on the signup. I could write a very similar blog post. Free trial period with a 60 days money back guaranty works the best for us and our users.
  - Karunamon 11y ago
    The way you've phrased this, there's no surprise that you're converting less users, seeing as how the "conversion" is no longer automatic. Are you judging a conversion as someone that's paid for at least one month off service?
nothrabannosir 11y ago
Not that I'm any expert in this field, but how does your position rhyme with the observation that almost every big-time saas / paas / *aas platform out there uses that model? - Github - Heroku - Cloudflare - MS Azure AWS perhaps being the biggest one to charge immediately, although that's so incredibly low, I wonder if it still even counts. And even they have a free tier...
- SomeStupidPoint 11y ago
  The free tier is for 1 year, so technically, it's a limited time trial and does require your credit card up front (which is their main method of converting free accounts -- upselling on that credit card). I think AWS is the type of free the GP supports: limited time, credit card up front, clear upsell channels for the limited service.
- gedrap 11y ago
  >>> Github Well, it worked out for GitHub because: 1) they have a great product and everyone can see how great it is, without signing up; 2) because of the nature, the word spreads exponentially. One free user can spread the word to literally tens of thousands of potential paying users. So GitHub is in a rather unique position.
- jdietrich 11y ago
  There are some real subtleties involved here. GitHub have clearly benefited from the network effects of being the de-facto platform for open source. Their free tier doesn't include any private repos, so it won't cannibalise sales of paid tiers. I think that their free tier is effectively a trial on steroids - you're free to contribute to open source projects, engage with the user community and learn the platform, but you have to start paying from day one if you intend to use GitHub for commercial projects. Heroku's free tier is again a sort of supercharged free trial, in that the free tier is too limited to use in production. The free tier offers very little value to users who have no intention of ever upgrading to a paid tier. AWS's free tier is just a very generous free trial - after twelve months, you have to start paying. I think in all cases, the key factor is whether there's a concrete plan for how the free tier feeds into your business. If your product has high switching costs and requires a big investment in learning to use effectively, then it may make sense to have a free tier specifically aimed at letting people learn the platform. Network effects are the obvious case where free users have real business value. I think that the mistake comes from the presumption that there ought to be a free tier, regardless of whether there's a compelling business case for it. As regards you contention that almost every big SAAS product offers a free tier, I think there are at least as many counterexamples - Salesforce, SAP, Citrix, Blackboard, Basecamp, Moz, Kissmetrics.
curiously 11y ago
Not sure why companies are still obsessed with obtaining millions of cheap/non-paying users? Fantastic, you've acquired an audience of people so cheap they refuse to buy your entry level tier product.. Sounds like an awful problem. THIS. Basically, most people are just following the herd. "Oh my competitor has it I better do the same", except you might not be as big as 37signals or Salesforce to be able to support such a huge ratio of freeloaders vs paying users. With a credit card trial, you get less number of freeloaders but they are still there.
vbezhenar 11y ago
Free user can promote service with his friends, can blog about it, etc. Basically you are paying (usually) negligible cost of maintaining free account for some possible marketing. Whether it works or not is questionable, but obviously it does work in some areas.
dnevogt12 11y ago
I'm the author of this post and yes, this is exactly what we found. All I can do is speak from experience in selling a B2B app that is priced at $5 a month / user (I can see how this would be different for different pricing models), but what we found was that these were not the users that were talking about the app and spreading the word for us. RE: collect credit card up front... This is one of the next tests we are going to set up in our on-boarding process. Right now we don't bill the cc (or ask for it) up front.
- gedrap 11y ago
  >>> RE: collect credit card up front... This is one of the next tests we are going to set up in our on-boarding process. Right now we don't bill the cc (or ask for it) up front. Please, pretty please, don't do that. I am really not sure if a few extra bucks are worth having a bunch of frustrated users.

by aantix 11y ago

Karunamon 11y ago

make it a trial and capture their credit card up front. Charge it after 30 days. FWIW, I personally refuse to do business with companies that utilize this kind of flow - it feels like a scummy dark pattern, where they're banking on people to forget they've signed up and they can get at least one month's worth of charge out of it. That goes double when you can sign up online but it requires calling in (and talking to "retention" people) to cancel. "But we don't want to interrupt your service.." goes the salesman.. yeah right. If you're going the free trial route, fine, but it should require affirmative action after the trial to begin billing. You don't need my credit card until I've actually bought something from you.

jdmichal 11y ago
I agree. Ticking time bomb on the account is fine, and a series of triggered reminder emails should be sufficient to prevent the dead switch surprise. Asking for payment information before I even begin a free trial leads me to assume that you don't believe your product is good enough to withstand the trial period on its own merits, and you are hoping to catch me just forgetting about it. Makes me wonder what other questionable actions might be taken, especially regarding hard things like security. Does not make me feel safe at all.
curiously 11y ago
FWIW, I personally refuse to do business with companies that utilize this kind of flow Well, I think you know the river runs both ways, they probably want to filter out people who share that mentality, not judging your views on morality or whatever but it does not support your argument at all. If you are not willing to provide a card up front it means you don't have money to spend right there and then, and those companies probably are more interested in talking to those who have shown they are able to pay if required.
- jeffmould 11y ago
  I understand the want to filter out people mentality, but I completely disagree with thinking that just because a person does not want to provide a credit card upfront that they are not a valid customer or don't have the money to spend. I look at it this way. Let's say I come across Acme Corporation's website. They are selling what appears to be a really cool product. I figure I will give it a try and signup for the free trial and at the same time enter my credit card info. I give it whirl, but in the middle of testing it out I get sidetracked with a phone call or whatever and forget to finish testing. I wasn't impressed enough with the little testing I had completed to go back immediately and after a couple days I completely forget I even signed up. Now 29 days later my credit card gets whacked for a $20 monthly fee. I have two choices at this point. I can file a chargeback, which isn't fair to the company. Or I can eat the cost and cancel immediately, which isn't fair to me. In my opinion, there is absolutely no reason to demand a credit card upfront for a trial. *Edited to fix a typo.
  - mokkol 11y ago
    I think almost all the companies have a X days money back guaranty
    - Karunamon 11y ago
      Which as recent FDA actions can tell us, are often worth the paper they're printed on. Sign up now, give my credit card, and to cancel I have to call a phone number which may or may not work and talk to a person who's entire reason for employment is to make it difficult for me to cancel with no assurance that anything has actually been cancelled until the next billing cycle. When I take over the world, it will be a law on pain of summary execution that any recurring billing which can be signed up for online must be cancellable online :/
  - curiously 11y ago
    Well if you can pay for a trial even better, the credit card requirement is just another step below that,the next which is a free trial with no card. Whichever they offer is valid because businesses differ. To claim requiring a card for a trial is shady is just one small irrelevant aspect for the vendor. The card requirement is a great way to filter out the less serious ones, if we miss one exception like yourself, it's no biggie, there's always someone who need the solution and willing to pay for it. The only reason where I'd be reluctant to do a card trial is if it was difficult to cancel or they didn't offer a refund if I accidentally forget. Plenty of shady people using fake cards to sign up for trial as well.
mokkol 11y ago
I totally understand your pain but I don't agree. We got rid of the CC on our signup (www.nusii.com). We got many more users because of that (3 to 4 times more) but we've seen that the conversion rate (trial to paid) was WAY lower. 4% instead of 40%. We don't exactly know why this is, but I think it is because the CC makes you want to try the product much more. You end up with a happier user. Our biggest mistake was getting rid of the CC on the signup. I could write a very similar blog post. Free trial period with a 60 days money back guaranty works the best for us and our users.
- Karunamon 11y ago
  The way you've phrased this, there's no surprise that you're converting less users, seeing as how the "conversion" is no longer automatic. Are you judging a conversion as someone that's paid for at least one month off service?

nothrabannosir 11y ago

Not that I'm any expert in this field, but how does your position rhyme with the observation that almost every big-time saas / paas / *aas platform out there uses that model? - Github - Heroku - Cloudflare - MS Azure AWS perhaps being the biggest one to charge immediately, although that's so incredibly low, I wonder if it still even counts. And even they have a free tier...

SomeStupidPoint 11y ago
The free tier is for 1 year, so technically, it's a limited time trial and does require your credit card up front (which is their main method of converting free accounts -- upselling on that credit card). I think AWS is the type of free the GP supports: limited time, credit card up front, clear upsell channels for the limited service.
gedrap 11y ago
>>> Github Well, it worked out for GitHub because: 1) they have a great product and everyone can see how great it is, without signing up; 2) because of the nature, the word spreads exponentially. One free user can spread the word to literally tens of thousands of potential paying users. So GitHub is in a rather unique position.
jdietrich 11y ago
There are some real subtleties involved here. GitHub have clearly benefited from the network effects of being the de-facto platform for open source. Their free tier doesn't include any private repos, so it won't cannibalise sales of paid tiers. I think that their free tier is effectively a trial on steroids - you're free to contribute to open source projects, engage with the user community and learn the platform, but you have to start paying from day one if you intend to use GitHub for commercial projects. Heroku's free tier is again a sort of supercharged free trial, in that the free tier is too limited to use in production. The free tier offers very little value to users who have no intention of ever upgrading to a paid tier. AWS's free tier is just a very generous free trial - after twelve months, you have to start paying. I think in all cases, the key factor is whether there's a concrete plan for how the free tier feeds into your business. If your product has high switching costs and requires a big investment in learning to use effectively, then it may make sense to have a free tier specifically aimed at letting people learn the platform. Network effects are the obvious case where free users have real business value. I think that the mistake comes from the presumption that there ought to be a free tier, regardless of whether there's a compelling business case for it. As regards you contention that almost every big SAAS product offers a free tier, I think there are at least as many counterexamples - Salesforce, SAP, Citrix, Blackboard, Basecamp, Moz, Kissmetrics.

curiously 11y ago

Not sure why companies are still obsessed with obtaining millions of cheap/non-paying users? Fantastic, you've acquired an audience of people so cheap they refuse to buy your entry level tier product.. Sounds like an awful problem. THIS. Basically, most people are just following the herd. "Oh my competitor has it I better do the same", except you might not be as big as 37signals or Salesforce to be able to support such a huge ratio of freeloaders vs paying users. With a credit card trial, you get less number of freeloaders but they are still there.

vbezhenar 11y ago

Free user can promote service with his friends, can blog about it, etc. Basically you are paying (usually) negligible cost of maintaining free account for some possible marketing. Whether it works or not is questionable, but obviously it does work in some areas.

dnevogt12 11y ago

I'm the author of this post and yes, this is exactly what we found. All I can do is speak from experience in selling a B2B app that is priced at $5 a month / user (I can see how this would be different for different pricing models), but what we found was that these were not the users that were talking about the app and spreading the word for us. RE: collect credit card up front... This is one of the next tests we are going to set up in our on-boarding process. Right now we don't bill the cc (or ask for it) up front.

gedrap 11y ago
>>> RE: collect credit card up front... This is one of the next tests we are going to set up in our on-boarding process. Right now we don't bill the cc (or ask for it) up front. Please, pretty please, don't do that. I am really not sure if a few extra bucks are worth having a bunch of frustrated users.