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Ask HN: Free trial vs money back guarantee

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Re: Ask HN: Free trial vs money back guarantee

#11

Post by jaf656s »

abinoda wrote: post #5
blackysky wrote: post #3

the best solution is to split test both options

I'm asking HN because I'm hoping someone HAS split-tested or can share from experience.

We tried both ways, and the free trial was a clear winner. I think this could depend on your service, however.

Something else to consider: even though we had more people sign up and pay, we also had far more people sign up and try without paying. Several of those users also gave us free, insightful feedback. Especially if you are starting a new service, this is worth more than the paying customers who give no feedback.

Re: Ask HN: Free trial vs money back guarantee

#14

Post by jaredsohn »

Another option to consider is what the music site rdio.com does. They offer a three-day free trial and then ask for a credit card (which they won't charge) to extend the trial for a longer period. This way you get more people to start using your site and have a way to quickly get a credit card number.

Re: Ask HN: Free trial vs money back guarantee

#18

Post by philipsflat »

mattmanser wrote: post #10

They use 'trial periods' as selling point number two on their list of features: http://www.braintreepaymentsolutions.com/services/recurring-... Does what they claim to offer and what they actually offer differ massively then?

This is a recent policy change for banks. Banks hate chargebacks. Taking credit card info to be charged after a trial period is up, is a reliable recipe for an increased amount of chargebacks. It is unfortunate and there's been talk of this policy being altered or at least loosened, but who knows?

Re: Ask HN: Free trial vs money back guarantee

#19

Post by lsc »

I think it largely depends on how much it costs you to provide a customer account. If this cost is low, I agree with others that #1 is the best option.

See, I tried option #1, and my product, well, it costs me quite a lot. I found that very few of my first month free trials converted to paying customers, they all used bandwidth like crazy, and looking, I believe that the majority of signups used fake names. At the end of this trial period I was left with a rather hefty bandwidth bill and a whole lot of now empty servers. it was pretty miserable. I don't think my actual paying customer signup rate was any different than it was the month before.

so for my business, #2 is the only way to go.

On the other hand, if the cost to you of hosting these free customers is almost nothing, and you are okay with the fact that your conversion rate will probably not be as great as you think it will be and that many of your customers will likely sign up with fake names just to try it out, option #1 might be just fine for you.

Re: Ask HN: Free trial vs money back guarantee

#20

Post by phillytom »

abinoda wrote: post #5
blackysky wrote: post #3

the best solution is to split test both options

I'm asking HN because I'm hoping someone HAS split-tested or can share from experience.

Cost of provisioning and supporting was already mentioned - that's big .

Another key point to consider is the amount of effort required from the user in order to derive value from your product. If the product can be used easily and passively (e.g. Pandora) than a free signup makes the most sense.

If your product requires higher user engagement to be useful - i.e. they need to dedicate an hour or two to working with it, or need to integrate with something, than a refund or out may make more sense - many people treat free trials as worth what they paid for them - nothing. If someone has to pull out a CC, they have more likely overcome the hurdles necessary to engage with your service.

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