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Ask HN: Free trial vs money back guarantee

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21–29 of 29 posts

Re: Ask HN: Free trial vs money back guarantee

#21

Post by sp4rki »

I'd recommend having trial periods of at least a month and if the user doesn't add a credit card on the trial's end, the account gets demoted to a free severely limited account. I hate getting locked out of a system and can seriously impact my wanting to stay with the company. Demoting the account gives me an incentive without telling me "hey cheap bastard give me your money or leave!"

Re: Ask HN: Free trial vs money back guarantee

#22

Post by ahi »

anamax wrote: post #15

You can combine them - 14 day free trial and after they pay, they still have another 16 days to get a refund. You market it as "we want to make it easy and to make sure that you're happy".

I think this is a bad idea. It's hard to fit into marketing and makes them think too much

Re: Ask HN: Free trial vs money back guarantee

#23

Post by dangrossman »

I do #2 mostly since customers signing up for my paid SaaS product often need some handholding during the first few days to get started. If I offered free trials, the users wouldn't have that investment they just made mentally pushing them to take the bit of time it takes to ramp up and start seeing the benefits of the product.

Re: Ask HN: Free trial vs money back guarantee

#24

Post by jacquesm »

I would try option (2) first, but I would not default to a 'money back guarantee', I would just say they get a 10 day trial at a slightly higher rate than the normal subscription.

That way you get a much lower initial price point (the main hurdle), and you rule out a bunch of jackasses that sign up, use the trial, cancel then sign up again.

Refunds should be reserved for customers with complaints otherwise what are you going to give them ?

Also, customer complaints are a great way to help you develop your product so you want to have that personal contact.

Re: Ask HN: Free trial vs money back guarantee

#28

Post by dclaysmith »

If your service is compelling and your cost per customer is low enough, then I'd go with #1. If you can't convert the users to paying customers then you probably need to revisit your business model.

Assuming your service is useful--and the visitor decides they need/want it--you need to factor in their switching cost. If they have some time invested in configuring and using their account, they will be less likely to move to a competitor. If your service is prone to throwaway accounts, this clearly isn't a factor.

Recently signed up for a 30 day trial with Pingdom and converted to a paying account ($49/month or so). Not sure what their incremental cost per customer would be (middle of the road I'd say) but they provide a useful service and once I got all my servers set up and had a significant history established, I didn't want to bother evaluating/switching to a competitor.

Re: Ask HN: Free trial vs money back guarantee

#29

Post by monicaobrien »

Hi Abi, this is Monica from Braintree.

The cautiousness around trial periods, discounted offers, and continuity programs by credit card processing providers is due to recent crack down from Visa and MasterCard. The guidelines and rules passed down by them are a little vague so the card association banks have mostly erred on the conservative side.

The premise behind the concern is that these types of offers and billing methods increase chargeback risk and financial loss. This is especially true for new merchants or higher risk products or services.

We've been hearing from some of the banks we work with that they're considering loosening up their rules or applying them differently to certain types of merchants.

Regarding your dilemma, option #1 should have fewer chargebacks, which can be costly to your business.

Hope that helps!

Monica

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