Requiring payment method for free trials?
Hey all
This is something I've been going backwards and forwards on for a while and I think I've settled on an answer, but am interested in what others think.
My app has a 7 day free trial period. Initially I was requiring a payment method (PayPal or CC) to be specified when signing up, the idea being that it would provide the lowest resistance for converting from a trial user to a paid user. Obviously if a user cancelled before the end of the 7 days, they wouldn't be charged anything.
I've wrestled with this since I did it as, personally, I hate sites that convert me automatically, it just feels a bit cynical. I am sending out an email 3 days before the end of the trial to remind customers, but I was still struggling on the morals of it. I only want people to pay for my service if they value it sufficiently to do so, I don't want them to end up paying because they either forgot or were too apathetic to cancel during the trial.
For this reason, I've now switched to not requiring a payment method on signup. This means there is an additional hurdle in converting users since they have to supply payment details before the end of the trial, but I feel that if they value the service highly enough, they'll be reluctant to lose it and will therefore ensure they do that.
What are other folks opinions on this?
I think a lot of advice around pricing, free trials, etc. ignores second-order effects.
For example, you see people talk about testing pricing all the time. By "testing pricing" they mean that they offer different website visitors different prices and see which one leads to the most people paying them. But they're probably not looking at things like long-term churn, and they're certainly not looking at things like word-of-mouth referrals and brand building (because those things are virtually impossible to measure). So many people think they're making rational decisions based on indisputable evidence when in fact they're just guessing like the rest of us.
My belief is that when it comes to hard-to-measure second-order effects, doing what's best for the customer will almost always lead to the best outcome. There's absolutely no argument that requiring a credit card up-front is best for the customer. Literally no customer wants that. Companies that do that are just doing it for their own benefit at the expense of the customer's happiness.
If you're deciding between two options and it's not 100% clear which one will lead to better outcomes for you, I think it's a no-brainer that you should do what's best for the customer. I mean, that might make sense even if it is worse for you, but it definitely makes sense if you aren't sure. So I personally think you're doing the right thing.
I've been through this back and forth with https://hyper.host, now i offer a restricted free 14 day trial without payment card, but upon signup i risk asses new customers using Clear Bits free api, if the risk is high i ask for additional verification. I rarely get a customer complain about the extra verification (95% of the time the account was clearly dodgy/spammy or created for fraudulent purposes so they don't contact me).
This may not be the best approach but it works fine for me and has for around 6 months now. Clear Bit are pretty smart at picking up spammy signups. Example being if they come back a week later with a different email, Clear Bit will rank them even riskier because they have the same IP and another attempt to get in. Another plus is they also verify the email address so extra service for free 😄
Side note, i also use an email deliverability/disposable validation in Laravel at signup so the form is just rejected. I also use a honeypot field to catch out bots.
I hope some of this helps!
Thanks for that @tonycodes, some really useful stuff there! I'd never heard of Clear Bits before, I'll certainly be looking at that. I've had a few signups fail conversion due to bad payment details, they're not a major hassle but it would be good to eliminate them as much as possible! :)
I just turned on a two week free trial without requiring the CC upfront myself. I might be fooling myself but my hope is that I will provide enough value to people that getting the card afterwards isn't going to be a hindrance.
That's my hope too!
Here are a couple more things to consider:
Are you susceptible to trial fraud? eg. are you giving access to content that is valuable to your users - so valuable that they would rather sign up for free trials with fake email accounts to get basically unlimited access to your product? (Yes, it is possible to use fake credit cards numbers, but it's a lot harder and less well-known to the average user.)
Do people know your product's value without having to try your product for free? eg. a really well established product may not need to entice users by offering a free trial. Maybe they know that most customers know their product is worth paying for.
Hi @yj. Thanks for your reply. Yes, fraud is a concern, but I'm not sure I will be particularly susceptible as there's an effort cost involved in a customer setting up their system, which may discourage them from having to start from scratch every week. There's definitely a requirement for me to have a free trial, customers need to evaluate what I'm offering, my promo video isn't enough really.
Either strategy is fine as long as customers know what to expect.
Requiring payment is an extra hurdle but it filters out non-serious users.
Some companies offer free forever plans.
Some companies offer free trials.
Some companies do both.
AWS offers a 12-month trial which often surprises users when they are billed after the 12-month period.
Ahrefs offers a discounted, one-week paid trial for $7. This validates payment and makes conversion more likely.
Sheet2Site removed the free plan completely. They saw less signups but more revenue.
Personal Story
I considered joining Fizzle yesterday but decided against it. They require a payment method for trials. I didn't want to be automatically converted. And I didn't want the mental overhead of remembering to cancel before the trial was up. I guess the pain wasn't serious enough.
Ditto @rosiesherry. I think it's important to be comfortable with whatever decision you make. Self signaling matters. Acting inconsistently with our values is a slippery slope.
Maybe you'll find this post on freemium marketing useful.
Hope this helps.
Thanks for that @dru_riley, very interesting insights there. I'll definitely be taking the time to read the posts you linked to, there's some useful stuff! :)
I would go with what you feel comfortable with.
It's a personal choice at the end of the day, I would personally choose not to require payments as like you I hate it myself and wouldn't feel right about doing that to customers.
But you hate it in software that you don’t know is valuable. Or at least software that you are not sure can be valuable. I have always required a credit card, I want to keep away the clients that don’t even believe that there could be value.
Like I say, it's a personal thing. I feel a free trial should be a free trial and not something that people are auto added onto for payments. I personally like to have time decide when to actually sign up, I may not want to do it straight after a trial.
I've seen people duped by this kind of stuff, my mother is sadly one of them that never learns (!).
Another similar situation is auto renewals of (annual) subscriptions, we found that some people would get annoyed that an annual payment was taken, so we put more effort into letting people know that renewals are coming up. Yes people sometimes unsubscribe, but we also don't get upset customers and the admin overhead of processing refunds.
Yes, that's exactly my feeling @rosiesherry. I couldn't bear it if people ended up paying money to me because I'd tricked them or relied on their apathy, I want people to pay for it only if they feel it is worth it for them :)
I've read on this pretty extensively..
In general, requiring a payment verification upfront lowers your free trial conversions but increases your paid plan conversions. Having no upfront verification will increase your free trial signups but lowers your paid plan conversions.
So you just have to decide which side you want to be on. This is just from the research I've done.
Very interesting, thanks for that @tbotnar.
My current thinking is that if I make it as easy as possible for people to try the service for free, and they find it is of value to them, they'll convert to a paid plan even if it's slightly more effort than if they'd provided their payment details upfront. That may be a naïve perspective, but I think it makes sense for me. Time will tell!
I agree - Just try it out and see!
Also, it could help if you personally reach out to everyone that signs up for the free trial. Ask them for feedback/suggestions, and really show that you care to improve your product - that could also lead to higher conversions.
Yeah, that's definitely a possibility. I can't decide how I feel about companies that do that, I sometimes feel a bit pressured, I feel like "Leave me alone man, I'm just trying this out", other times it's useful to have someone get in touch.
If people choose to cancel they are asked for feedback on the product but, for some reason, that rarely gets filled in. Which is a shame, because it could be some of the most valuable feedback I could get!
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