Value Your Product
If your software provides value to customers, this post is meant for you. Below are the Top 3 reasons you should not give your software away for free, particularly if you are trying to build a company:
- Free customers almost never turn into paying customers.
- Free customers will drain your resources, typically more than a paying customer yet they are getting it for free. Gratefulness somehow turns into entitlement.
- Free customers typically have very few good things, if any, to say about your product. You see, this is how they justify not becoming a paying customer.
We’ve discussed these issues before, particularly for startups who feel they must give their product away for free to gain users. After all, you’re new, right? Wrong! At TPM Focus, we hold an alternative point of view. We believe you should focus on providing value with your product and in return, customers will gladly pay for that value they receive. The value can pertain to your product saving them time, saving them money, solving a challenging problem, or making them money. Please note, money is mentioned or related in some way. Why should your customers save or make money from using your product and you earn $0 for providing them value? Somehow, we are unable to come to grips with an already struggling, bootstrapped startup giving their value away for free. Now, we understand there are circumstances where you use a freemium model or a trial period to enable new customers to test out the product for a limited amount of time, but anything beyond that…well…
You may expect there to be a spirit of reciprocity by you providing your technology for free to customers, but there are no guarantees. In fact, the data suggests the opposite will occur–they will not buy your product at all. In addition, as soon as you propose they start paying for it, they’ll switch to another similar technology that fulfills their needs. Your product was a tool that allowed them to figure out what they need, want, and like and find it somewhere else cheaper or free. Offended by that? Don’t be. You see people don’t value what they get for free. It’s important to charge for your product so that there is the perception of value and respect for the mutual benefit of the relationship.
Drained then Dumped
It’s comical that non-paying customers can be so much more demanding than paying customers, but it’s common. We had a client that sold a “teaser” product for $1.99. It was actually a loss leader for them to attract quality, qualified customers to their business (or so they thought). Eventually, they had to stop selling the product because customers complained about everything from the size of it to the time it took for them to receive it. The number of hours this product consumed in customer service was ludicrous. And, you already know how it concluded, right? The disgruntled buyers never returned and they also left unfavorable remarks on the company’s social media channels. Was it worth it? This client said it wasn’t. After all, who likes to be drained then dumped?
To conclude, we must point out that companies are in business to make money. Money is necessary to operate and provide value to customers and there is absolutely nothing wrong with that truth. However, there are times when one may decide to allow their product to be tested in advance of buying. Trial periods are effective when used sparingly. Anything beyond that where your work is being taken advantage of by non-paying customers who behave like paying customers, drain your resources, dump you, and then give you a bad online review anyways isn’t worth the effort.
If you have a varying opinion, we’d love to hear your experience in the comments below.
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