Ideas and Validation September 29, 2020

Asking $ for non-existent product?

Jonathan Cai @jonathancai

I hear a lot of advice about validating your ideas by creating simple landing pages and asking for signups and even money.

It makes sense - if someone is willing to sign up or even pull out their wallet, that might be the best signal that you are on to something with your idea.

But how do you actually justify asking them to pull out their wallet?
"Pay upfront to join our beta waitlist?"
"Pay $5 now when it will be $10 after we launch?"

Dunno if this is dumb question ūüėÖ, I'm still figuring these things out.
I've been burned too many times wasting months building crap that hasn't been validated.

  1. 6

    Charging based on a promise of delivery is: Kickstarter, concerts, video-game pre-orders, flights (tickets of all kinds, really), upfront payment for professional services, etc.

    It's not that you can't do it, it's that it requires an existing foundation of trust OR the beginnings of trust (evidence, track record, guarantees, social proof, etc.). The more evidence you supply, the more likely it is people will pay upfront.

    "If you're excited to join the private, invite-only launch coming in March 2021, you can reserve and lock-in the introductory 40% discount for life. Only 250 seats available.

    [Reserve a spot now - $49]"

    People with an urgent, expensive problem to solve or a valuable opportunity to capture will certainly pay a premium for a reservation. The evidence of this behaviour spans centuries. You're merely banking on the same principle here.

  2. 6

    I think this concept has become warped over time.

    You're not supposed to actually charge people if you have no product to deliver!

    That's flirting with the boundary between deception and fraud - just don't even go there.

    However there's nothing wrong with saying "this product costs $29 per month, sign up here" and then the "here" link takes people to a free waiting list where they can sign up. That's your validation.

    If you want to actually charge people, IMO you need some sort of working MVP that delivers on the value prop.

    1. 2

      @yongfook

      If you want to actually charge people, IMO you need some sort of working MVP that delivers on the value prop.

      I respectfully disagree.

      You could preorder a Tesla before they were mass-produced. There was no "try this MVP" at first. Are you suggesting Elon was flirting with fraud?

      I run a firm and my clients pay upfront for engagements. I don't have an mvp, I have case studies & social proof. Clients literally pay cash upfront solely for my words until a magical date in the future arrives and a product is delivered.

      Are you suggesting I work for free in advance to close deals with my clients?

      My contention is that not everything needs to be an instant purchase. Coldplay doesn't need to deliver an MVP show so that they can then charge their customers.

      In some cases it's acceptable - and even exciting - to pay > wait > benefit.

      1. 1

        indiehackers launching their first project (assumed based on OP's profile) do not have the same cachet of trust or track record of delivery that billionaire serial entrepreneurs or best-selling artists enjoy.

        https://en.wikipedia.org/wiki/Straw_man

        It's great that you have built up enough trust with your clients to be able to charge them in advance but that is not a luxury that everyone enjoys.

        That is a privilege you have earned, and I assumed the OP is starting from scratch without this kind of earned privilege.

        1. 1

          Okay, so what about the thousands of Kickstarters that, well, are literally kickstarting their projects and have zero earned trust?

          1. 2

            I believe you are both trying to help, but debating fringe cases will allow everyone to cite examples in which an assertion is correct, none of which helps OP.

            You can both make your case by simply stating that a variable has influence over his ability to execute and why. Saying he can or can't do something based on that variable is an absolute that leaves you open for arguments in which you can both be proven wrong. Save yourself the headache.

            OP is clearly asking how to do it, not if it's possible.

            So, let's take the stance that he can control some variables (ex. how to approach prospects, etc.) and can't control others (ex. his past track record, his celebrity status, etc.).

            Ignore everything he can't control and focus on the rest when offering advice.

            Examples:

            You can't change your past track record of successes and failures or celebrity status which is going to make it harder for you to charge up front. To negate that, consider partnering with people who do have that status to see if they'll endorse your product.

            Getting someone to pay up front for a product you don't have is obviously harder than if you did have one. However, try to negate that with creative pricing strategies like a discount up front, using a platform like Kickstarter, or just straight up ask 100 prospects to pay up front and see what they say. If it's an expensive, painful enough problem you're solving they just might do it!

    2. 2

      Good idea, but it can be taken even a bit further. They might click signup but eventually not purchase.

      However, if they fill the form with card data and hit buy, you can be almost sure they want the product. Of course, you will not charge them, but only thank them and put them on the waiting list.

  3. 5

    From my experience, asking for money before a product is actually built is a bit of a stretch as the process of developing that product will shape the product more than your initial idea. On top of that, developing a product (as you know) can take a decent amount of time. I'd be a pretty unhappy to sign up and pay, only to be stuck waiting for a few months for the product to be developed.

    With JustSketchMe I released a very simple version of the app, which took about a week to build, announed it on a few subreddits and then let it be. A few months later I was surprised by the data and built out a proper product that is profitable and healthy. Bear Blog is on a similar trajectory. It took a weekend to get the MVP out there, then it was blasted by Hacker News after I posted it, which was a good sign. I'm now in the process of creating a few addons.

    I think the whole landing page to measure interest is useful. That being said, I don't think it's concrete data and it should only be looked at as your first litmus test. Here's one of my favorite pieces on validating MVPs (or SLCs). It keeps dev time low and allows you to create something useful without spending too much time. https://blog.asmartbear.com/slc.html

    1. 1

      @HermanMartinus Nice to see you on here :) The article was also a nice read!

    2. 1

      Great article. Really appreciate the contrast between SLC and MVP.

  4. 1

    Offer a service that is as similar to the product as possible. Use the revenue to build the product and get the clients involved so they can give you feedback, ideas, etc.

  5. 1

    Create a small pre-product community, and charge a small fee for people to join it. They get to provide feedback and help decide the features in exchange for a small montly fee. Once the product is ready offer a special discount for members of your community.

  6. 1

    The waitlist is the way to go IMO. Even for Kickstarters, the people typically at least have a prototype before launching. Pre-selling based on just an idea can be risky.

    There are plenty of other ways to prove that people are willing to pay for something. If similar products exist and people are paying for them, that's a good sign. And like other people mentioned, a good ol' fashioned interest list could do the trick.

  7. 1

    It's called pre-sale, or pre-seed for investments.

    Kickstarter and the likes work with this model successfully. As a customer you're willing to invest in a product, or pre-order it below market value, with the risk that the supplier might fail to deliver.

    Similarly to buying a house on paper, you would put a down payment but your investment is good as the paper until it is delivered.

  8. 1

    While some famous people with a decent following could generate some pre-launch money, I don't think it's a way to go for most of us.

    I would not send you anything to be on a waiting list and I won't pay anything before launch either. And in my case, even your credentials won't help you.

    How famous are you?

    If you are building something more like hardware, where you need some money for production, start a Kickstarter. But software-wise, I would not expect people paying upfront like that.

    What's much better and customer friendly is to mention your expected pricing loud and clear. You won't be mistaken for a free service and whoever signs up is a lead that is ready to pay your pricepoint.

  9. 1

    I agree with @yongfook - but if you want to charge, why not charge using PayPal, and immediately after the successful charge you refund the user and tell him that you'll send him an email once the product is finished. That's all the validation you need.

  10. 1

    I'm planning to take the same approach to validate my current idea. So far this is what I have in mind. I will give them 6 months of 40% percent discount if they join now and other first customer priveledges. I'm not sure if this is the best way but, I guess if the problem is valid pain enough people will signup for it. That was what I was thinking first but after reading this post I think I should probably hold off on the charging but email them and ask them if they are willing to pay x amount just to gauge how much they see the problem costing them.
    I just started on designing the landing page https://podclip.tk

  11. 1

    When I think of this question I usually look at FontAwesome or Hey pre-sale marketing.

    For FontAwesome they always seem to pull massive hype around their pre-orders. Part of their pre-order offer is you can get the product significantly cheaper (like 50% off) and they offer exclusive pre-order add-ons or merch.

    One thing that Hey offered was reserving a @hey.com email address with addons of 'rare' emails, which had significant network & FOMO effect.

    While it's not going to be directly helpful because these two companies already had a massive audience, I think there are some useful lessons:

    • The product needs to feel real. Show, don't tell. You need product screenshots and/or videos
    • Create scarcity/urgency Give a date when it ends, offer limited discounts, etc
    • Make it sharable FontAwesome has a fun video that your friends will probably like, Hey had rare email addresses & a sharable vision

    Obviously, none of this is going to work if people don't already want your product. So I'd only start thinking about 'selling' pre-orders once you have some level of demand, which you could base off of email signups.

    Maybe @harrydry has a Marketing Example in the works covering this topic if he hasn't already talked about it

  12. 1

    As I know nothing about marketing, you can simply ignore this answer.

    how do you actually justify asking them to pull out their wallet?

    You don't. It happens. I put a price on a product and released it to the wild didn't promoted just a single IH post, when I gave up on it I saw the first sale. Announced it, a few days later another sale. Just do what you do, be sure potential customers knows your product is there and that should be it.

    Think for yourself, when was the last time you pull out your wallet and what was the trigger. Was the founder cold-emailed you? nope, when you saw the discount and felt FOMO? maybe but unlikely, because you don't put a value on it yet. It doesn't matter if it's 5 or 10 unless customers already get in line.

    Or I answer it with a marketer hat,

    You need to create a buzz before your product launch, prepare your landing page, take social accounts be active on all, dominate your niche, became an authoritative figure. Collect e-mails. While collecting, force them to tweet about your waitlist, like it's such a valuable asset. Ask or buy some social proof and boom you made 100+ pre-sales, early-birds w/e.

  13. 1

    Good question. I think it's a tough sell if you're transacting with a stranger.

    What you might want to do is to provide value upfront multiple times and ask for money later. Write content, offer a free ebook (Lead Magnet) and get your audience engaged. Help them as much as you can.

    After they got some value out of your free offerings you can ask them to join your paid beta.

Recommended Posts