Not Charging Could Be Hurting The True Value Of Your Product
Photo by Juliette G. on Unsplash
Here's a frustrating chicken egg problem. You have a new product, but you don't have the credibility or trust to get people to pay for it. So you give it away for free so you can get users in the door.
But what if letting people in for no cost makes people value your product less than it's actually worth?
Here's an example from the paragliding business. A paraglider pilot takes passengers up for tandem flights. The pilot would often give these flights out for free to friends and others because they couldn't bring themselves to charge money yet. The free passengers said it was a pretty cool experience, but not particularly mind blowing.
Then the pilot started charging the market rate, something like a couple of hundred dollars for a 15 minute flight. The passengers who paid said that it was a life changing experiencing that they would never forget, one of the best things they've done in their life, and they thanked the pilot profusely for the opportunity.
The only real difference was the price.
You'd think that people assess the value of your product completely based on their experience with it. But it's possible for the price to influence a person's ability to get the true value from your product.
This is worth considering even when you are in the very early stages of building and testing an MVP.
So if you are offering free access to your product in any way, and you're struggling to get users to see or experience the true value of your product, then the problem could be your price, not your product.
That's a really solid example of post-purchase rationalization. When people sink their money into an experience or a product they start actively looking to get value out of it, and often will inflate the true value to match the amount they sunk into it.
Another application of this is with products that require (or promise) behaviour change. Right now i'm working on a fitness startup and we're well aware that people looking for fitness applications (primarily beginners) have very uneven motivation. If you offer a free trial for people wanting to get fit, it can't be too long because the majority of them will inevitably fade out and they won't pay. Most fitness applications capitalize on the users high motivation early on. The interesting thing is that users don't feel cheated by this, they are actively looking to invest their money into something as an external motivator - "If I invested my money into this fitness product, I better use it." This is the entire business model of gyms as well.
In essence, users actually value higher priced products more (post purchase rationalization) and are actively seeking to buy something as a means of external motivation.
Yeah, great example. Fitness and anything behavior change. And talking about user motivation and commitment, having a price or a higher price on it also helps to filter out people who aren't going to great customers, which means also filtering for people who are more likely to have a great experience (if you deliver your side of the deal), which leads to telling their friends, great testimonials etc.
The pricing is just a dimension of what this is really about, which is everything around getting the right users with the right motivations, right expectations, right understanding of the value, right mindset! to match up with what your product is delivering so the magic can happen.
This is really interesting as its something as it's an approach I'm planning on using with my new product. I actually joined indiehackers to get some feedback and ideas from others who have faced this problem.
My product is software for business that allow them to contact potential customers via our application, however customers will only download our application if their are enough businesses on board. Similar to DoorDash, why download the app if no restaurants are on it, why should restaurants use it if no users have the app.
Its hard to justify the value of the product initially when signing on businesses to use it is crucial to the growth and success of the product, therefore a free trial not only benefits the business but helps build the userbase to a point where they see the value and are happy to pay. I'd be interested to hear how others have tackled the Chicken & Egg problem for these kind of SaaS products.
I can see how this could be an issue for non-digital products or services.
But, for digital products and services, how would making something free negatively affect the true experience or value? If the quality of your product speaks for itself, wouldn't the user value it more?
If I use an excellent product that's free, I would remember that just as much, or even more than a product I paid for.
One way I know this can happen is if the product requires a certain level of investment in order for the user to get the value out of it. So like online courses or apps where the user needs to learn additional skills or stick to a regular practice, or something like this.
Having to pay for it can create a higher barrier where users need to come in with more motivation, or more commitment to invest in making the product work for them.
But you're right, if the quality of the product speaks for itself, then price might not have as much of an impact. Or a free or cheap option might be perceive as a good deal if you've built up credibility, there's demand, there's understanding of the problem etc.
What if the quality of your product doesn't speak for itself? What if you've innovated something, and the product isn't there yet, but it's the only solution to the problem? What if your product is going to make people's live easier and save them a ton of time, but they won't see the return on investment until months of use?
Charging for it can tell people how much they should be valuing the product, and put pressure on you to justify that value, to educate, to set the right expectations before users hit your product.