Why you should have a credit-based trial for your SaaS instead of a time-based one

Free trials are offered in the majority of SaaS products I've seen, but most of the time it's for a time period like 14 or 30 days.

I recently launched a free trial option for my SaaS GummySearch, but instead of going with a time-based trial, I opted to make it a credit-based one. This means that users on the trial have a certain amount of credits (in my case, community discovery and conversation searches). After they run out of credits, they have the option to buy a subscription to continue using the product.

Here are the pros and cons of this approach.

First of all, should you have a free trial at all?
In the early days of your SaaS product, you're not optimizing for revenue. You want to build the best product possible for your users, and a strong feedback loop with your early users is very important. A free trial allows for you to get more people in the door with less friction, and opens up the door for you to receive feedback from both users that decided to subscribe, and also ones that didn't.

A free trial doesn't make sense in all scenarios, if you have a high server/data cost to each customer, it will require you to accrue a cost for every person that joins the trial, even if they don't end up paying you.

Figuring out activation metrics
By storing usage of the product, and analyzing how much it was used in various scenarios (subscribed at end of trial, subscribed early, didn't subscribe), you can analyze your platform's activation rate, and the amount of value that a user needs to get out of it in order to subscribe.

This data is incredibly valuable as it can guide your decisions on onboarding, and can tell you which of your acquisition channels are the most successful with your target customers.

Quicker time to payment
If you had a 30-day free trial to a product, even if you loved it, you probably wouldn't start paying until your trial had expired.

With a credit-based trial, if you have a user who's a perfect fit for the product and uses all of their credits in the first day, you have the opportunity to close them as a customer that very same day.

Having options
By building in a credit system, you have the opportunity to sell those credits in bundles for the customers that aren't ready to commit to a monthly subscription. Subscription fatigue is real, and although it's a great thing for revenue, it cuts down on the % of users who are willing to be customers of your product.

Additionally, the credits can be used to incentivize your users to share your product. You can offer more credits if someone shares your product with their own social network, essentially crowdsourcing your marketing efforts.

When credit-based doesn't make sense
Credit-based won't work in all scenarios. It needs to be native to your product. In my scenario, searches are a core feature, and it makes sense to count them. For another type of product, this may not apply.

Additionally, team-based products could have a hard time with usage if it's possible for one user to use up all of the credits and leave their teammates with nothing. Do what's best for your product.

What do you think? Does anyone else use a credit-based trial and how does it work for you?

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