When I was on the corporate side of the table I would meet new suppliers who would sit down and pitch us their product or service, and almost all of them would throw in a free trial as standard. From a startup’s perspective, the theory goes that free trials get your foot in the door with established brands and lend themselves to an eventual graduation to a paying client. The reality is that this theory, whilst not always wrong, is inherently flawed. Of all the free trials I green-lighted, not a single one came to anything. Here’s why, and what to do instead.
Don’t leave pricing until last
Pitching a product isn’t the hard part. As an entrepreneur it’s expected that you’ll be passionate about your product, and most successful entrepreneurs understand the basic laws of pitching and presenting. Brands don’t doubt your enthusiasm, and they might even love your product. The problems begin when the subject of price rears its ugly head, usually right at the end of the conversation. Both sides of the table skirt around the subject of money, neither party wants to show their hand, until eventually the buyer asks, ‘how much?’. To which the general answer from the entrepreneur is, ‘it depends’. I’ve been involved in brand-startup relationships where it’s taken 3 months of email back and forth to arrive at a price - the buyer figuring out what they need, the startup figuring out how much it’ll cost - by which time it’s too late. Free trials can mistakenly be considered as a defence mechanism against this very scenario. It’s an easy option because it avoids the discussion about price. Instead, I suggest that you…
Start with price
If you’re unsure about how much to charge for a trial, start with your break-even point and go from there. Once you’ve worked out a price point, create a consistent set of deliverables. You should know, for example, exactly what a £10k trial looks like. You can use a tiered pricing structure, but be sure to know exactly what each price point will buy.
Free is not a good deal for anyone
As a startup, if you do something for free you risk creating a mismatch of expectations between you and the buyer. Nobody likes doing something for free, especially if it ends up costing you money. Starting with free can lead to a strained relationship down the line. The startup expects paid work to follow, the buyer expects more for free. If you put a value on what you’re offering in the form of a price, there’s a higher chance that somebody will value it themselves when they pay for it. The great irony is that even if you offer a free trial thinking you’re giving someone a great deal, to the buyer your product is effectively worthless. Trouble also arises if the buyer says yes to a free trial, even though they know that it’s highly unlikely that they will pay for the product or service in the future.
Get skin in the game
Corporate people are very careful with how they spend their budget because they know that eventually they’ll have to justify it to their team and superiors. If I’m sat in a meeting and my boss asks me what that £10,000 outgoing is for, I’d better have an answer lined up that explains exactly what we stand to gain, and why it’s a good investment. By this point I’m personally invested in that project, because I know that in 3 months time I’m going to be asked to report back on how it went. In the corporate world, the mere fact that somebody has paid for something can generate a much higher degree of personal responsibility. The individual, and therefore the company, has skin in the game, and they’re going to engage with the trial to a far greater extent. Nobody wants to put their company’s money into a project only to forget about it. Free is forgettable.
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FAQs
Free is not a good deal for anyone
The startup expects paid work to follow, the buyer expects more for free. If you put a value on what you're offering in the form of a price, there's a higher chance that somebody will value it themselves when they pay for it.
Why are free trials effective? ›
Increased conversion rates
They can see the value in what you offer without having to make a full commitment upfront, which can help overcome any objections or hesitations they may have had. In many cases, once someone has tried a product or service through a free trial, they are much more likely to make a purchase.
Can I trust free trials? ›
Your free trial probably has a time limit. And once it passes without you telling them to cancel your “order,” you may be on the hook for more than you bargained for. Fourth – Read your credit card statements carefully to make sure you're not being charged for something you didn't order.
Can you cancel a free trial and not get charged? ›
Usually, you have to give your credit card number for a “free trial.” That way, the company can charge you if you don't cancel before the trial period ends. Dishonest businesses make it tough to cancel, and will keep charging you — even if you don't want the product or subscription anymore.
Is it illegal to keep making free trials? ›
If you run a free trial for your app but do not offer a user a way to end it and avoid subscription fees, you could run afoul of the laws. Again, you need to make the terms of your free trial conspicuous and allow users to end trials if they decide not to continue with the subscription of your product.
What is the success rate of free trial? ›
A good FCR for an opt-in trial is 8.2%, while the consensus for an opt-out trial is an average of 2.5%. Remember that you should evaluate your free trial conversion rate alongside metrics like CAC and LTV ratio.
What are the pros and cons of free trial? ›
A free trial can help attract new customers, reduce risk, build trust, increase conversion rates, and improve customer loyalty. However, it can also be costly, limit revenue potential, lower the perceived value of the product or service, and attract unqualified leads.
What is the free trial strategy? ›
A free trial marketing strategy is a comprehensive plan designed to attract potential customers by offering them a limited period to experience your product or service at no cost.
Why do free trials exist? ›
Free trials are a common marketing strategy used by businesses to attract and convert potential customers. They offer a limited-time, no-cost opportunity for customers to try out a product or service before committing to a purchase.
How many people forget to cancel free trials? ›
In a Forbes survey from 2023, 50% of participants reported that they'd forgotten to cancel a subscription after a free trial, and 47% admitted to paying for a subscription they didn't use. Failing to cancel in time usually means you won't get your money back, but that's not always true.
But how long should free trials be? The vast majority of trials offered by companies range between 7 days and 90 days, with most concentrated in the 7 to 30 days bracket. Long trials give people more time to learn and use the product.
How to get rid of a free trial? ›
Canceling a Free Trial Through the Google Play Store
- Open the Google Play store app on a mobile Android phone or tablet.
- Tap your Google profile photo in the top right corner of the screen, next to "Search for apps & games"
- In the menu that appears, tap the 'Payments & Subscriptions' option.
- Next, tap 'Subscriptions'
When you begin the free trial, Google creates a billing account for you and credits $300 to your account. Anything you do that would normally result in a charge is billed against this credit. You will receive billing statements indicating how much of your free credit has been spent.
How do I get out of a subscription trap? ›
Make every effort to contact the company concerned to cancel the agreement. Contact your bank to cancel future payments. Ascertain with your bank whether a new card is needed.
Why do I have to pay for a free trial? ›
Free trials are considered a customer retention strategy. They're hoping that you'll decide to continue with their service after the free trial is over. When your card number is already attached to your account, there is no disruption of service, and the payment is seamless.
Is it illegal to use virtual cards for free trials? ›
Virtual credit cards are completely legal and available for mainstream use. In addition to virtual credit card numbers issued by the major card companies, there are also VCC generators. This option is legal to be used for card verification purposes that do not involve financial transactions, such as free trials.
Why do free trials charge $1? ›
Buyers may see a $1.00 charge on their statement for free trials. This is a pre-authentication to ensure if it's a real payment card or PayPal but there won't be any charge made if the trial is free. This transaction will drop from the buyer's statement shortly and they will not be charged.
What happens if you don't pay after a free trial? ›
If you have to put a credit or bank card in to get the free trial, know that once that trial is over, you will start getting charged if you don't cancel. If you agree to a contract for a certain period, most subscription services have an automatic renewal.
