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When should we charge for our product?

We are building out a tool right now that have competitors but where we think we have found a space in the market where our tool can fit. The MVP has been pretty quick to get off the ground and are soon ready to start testing with real users.

Our plan has been to launch the tool as a free version to begin with for a few beta-testers that we are collecting email from right now. The idea of having the free version first is to get some beta testers to help us flush out the bugs and also so that we do not have to build the payment system for the tool directly.

We have two different ideas of how to go forward with this and would love to get the communities input on it. Maybe there are other ideas of how to move this forward.

  1. We try to get 10-20 beta testers and try to get as many of them on a call so they can share their feedback and help us find bugs and so on. Simultaneously we are building out the payment system with some initial plans to start trying to find customers who will pay for the tool after the 10-20 beta testers. What to do with these bet testers? Can we maybe tell them in the beginning that they will get 3 months free or something for testing the tool and if they like it after 3 months they can keep it but pay? Do you give them a lifetime deal? Do you let them stay free for ever? Plan here is to try and charge customers for the tool ASAP so we know that people are willing to spend money on it.

  2. Try to get around 100 free users and gather as much information as we can from these initial free users. What do they like? What do they want to see changed? And so on. By having the product as free we should in theory have a lot more people signing up that we can collect insights from. After 100 users we probably know a lot more about the price-points for the tool as well compared to just 10-20 beta-testers. Are we risking to validate the idea but not that people are willing to spend money for it? Read before that the product is not validated until people are willing to open up their wallets.

These are two initial strategies that we have been thinking about when rolling out the product. Would love to get some feedback on our thoughts from the community.

  1. 2

    the short (hopefully not offensive answer is)... you just start with a figure and experiment. most folks do the 1st part and don't ever experiment with the price (or biz model). like the product, it must be iterated on.

    1. 2

      Thanks. Yes the price and models will definitely have to be experimented on. We were planning on having a free tier and a paid tier (freemium) so that's why my initial question was when to start showing the paid tier? If we do that right not we have to code the gated functionality for the premium tier or maybe just launch the free tier asap and keep on working to get the premium tier (and payment) up asa quickly as possible but at least we can now have conversations with people on a kind of working MVP instead of just screenshots.

      Like the input that the biz model and prices will, and are going to, have to change a few times so it should be experimented with. Thanks

      1. 1

        very cool! keep going!

  2. 2

    I have a slightly different opinion. 100% on getting validation on whether users will pay. But, a key question prior to that is whether your product actually delivers the intended value to the user.

    Yes, you can validate this using # of paid users as a proxy. But, it might be a premature jump. # of paid users is not the only indicator of PMF. And if you install a paywall too early, you may miss out on key insights that you may otherwise receive.

    1. 1

      Thanks for you answer. This is exactly what I've been thinking about. If we put up a paywall to early like you say we can miss out on valuable insights so it feels like there is pros and cons of them all and just need to pick some and be ready to change quickly :)

  3. 2

    And to echo what @ayushchat and @johnsillings said, now and I mean launch with the buy button.

    I've been there with my first startup - the beta users, build a community, etc. It feels great to have people using the product and "helping find bugs". However, the reality is free users are not the same a paid. Free user feedback is different and you're not validating if anyone will pay.

    The only real test of market validation (for paid products) is someone entering their credit card, so test that ASAP.

    And one final thought, it is easy to get into the trap of "let's wait until the site is more refined or this new feature is done." The truth is if no one is willing pay for the fundamental core offering, even if a bit rough, then the problem isn't design or additional features - it is people don't want this product (paid) or your marketing/message is off or you're not connecting with the right community.

    1. 1

      Thanks a lot for your answer. Yes I've also heard that I should launch with the buy button directly although that requires me to build the payment system directly. I get it that we can validate the idea without the actual product but because the MVP will be built in like 2-3 weeks we decided to build out the MVP and validate using it.

      This is not a system that do not exist already and we are also scratching out own itch. Would you wait to "launch" the actual product until payment system has been built then so that you can start charging directly? At the same time using a landing page and collecting emails until the product is ready?

      1. 2

        When launching, you don't need a full payment system. Have a buy button, email yourself the new sign up and go into Stripe and manually create the charge. Or use Stripe Checkout that is prebuilt. In other words, don't build an advanced payments system that supports thousands when you don't yet know if someone will pay. If you are so popular that you need to spend all day manually charging...well, congrats on a great problem to have. :)

        And collecting emails I've found not worth it for conversion and a distraction from getting the product out there.

  4. 2

    Now, or as soon as possible.

    Piggybacking on @ayushchat – this is the quickest, best way to validate your idea, and you should start charging (unless you have a very, very good reason not to).

  5. 2

    Pieter Levels has this great quote - the best way to validate an idea is to put a buy button on it.

    I'll just say, figure out where your customers hangout and ask them if this is a problem that is bothering them even, would they be willing to pay for a solution like this?
    And by ask them, I mean get on individual calls and DMs with a 100 people at least.

    Are you visiting places like niche subreddits or FB groups or Twitter where your customers hangout? Are people talking about the problem, do they know you (the founders) as members of their tribe?

    Even if your product solves their problems, why should they buy from you and not from some other person who is more familiar to them?

    Out of the 2 strategies mentioned, I like 2 more, but most important for me is to first validate the idea then build it, not the other way round.

    1. 1

      Thanks a lot for your answer. We are kind of scratching our own itch and do agree that we could do some other validation before but from our research we have found that there is interest for a product like ours so we decided to build a quick MVP and then validate using that. To be able to show people directly.

      Could you maybe talk a little bit more about why option 2 sounds better? To wait with charging for the product and have a free version only for the beginning?

      Thanks again.

      1. 1

        I liked option 2 because you were going to go to 100 people instead of 10-20.

        That is the crux for me.

        Talk to as many people as you can about the problem you are trying to solve.

        Ideally you should already be in a situation where you have a sizeable audience. But if not, then DMing people and taking their opinion or getting on a call for an interview is a good idea.

        Payments - Get their as soon as possible.
        Buy button == Best Validation

        1. 2

          Thanks. Yes we will talk to as many people as possible but it was more the fact if we can offer a free tier it's more likely that more people will try out the tool and offer us feedback and getting on calls and so on compared to if we ask them to purchase directly.

          The question was more when we should start charging. Directly? After 10-20 free "beta-testers" or after say 100 free users. Also agree that buy button is the best validation but I've also read a lot that people are giving the initial "early-bird"-users say 3 or 6 months free to lower the friction of a person wanting to try out the tool.

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            It's tough.
            From personal experience, I write info products, so the conditions are different, but I first put up the landing page and see if I get any pre-orders, coz info products can be a lot of work upfront, though less ongoing work.
            If I get 8-10 preorders then I get to work, it may not be a lot, but I know there is some demand for the product. If not, then I dump it and move onto something else.

            As I user, I recently tried out chime.so, its a Twitter scheduling tool. I tried it coz Ive seen the founder on Twitter and he had built up a lot of buzz and goodwill before the launch.

            I did not even need it, but signed up for the 14 day trial just because I like the founder, and may actually end up paying $9 a month now as well after the trial ends.

            I think you can start with something very low like $5 a month and see if people show interest. Once you have good userbase, raise the prices gradually.

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