My natural inclination for pre-release software is that it should be free. You're trying to get people to try it out, knowing that the product is incomplete and potentially more buggy than you'd prefer, hopefully in exchange for feedback. It seems like these beta versions should be free or come at a discount from the final price. An example of this is Windows 8 was free before the initial release as a beta or "Community Technical Preview" (CTP).
On the other hand, when I look at a lot of crowdfunded software projects on IndieGoGo or Kickstarter, I see that for many of them, you pay say $20 for the final version, but if you pay $50, then you get the beta or early access versions as well. In other words, beta access comes at a premium.
This definitely goes against my initial notions on the matter. At this point, I can't tell if they're just being foolish or if there's something that I'm missing that is worth considering.
I'd love to get some thoughts from the crowd on this, especially if anybody here has done the "premium beta" option with success.
Something that you feel is terrible and a work in progress could provide users enough value to make it worth paying for. I would suggesting charing as soon as possible. If people are getting value from your beta product, it's worth charging for (and it's worth it for them to pay for).
It's hard to move from free to paid, it's a conceptual issue you create with your users by offering it to them for free and then asking to start paying you. A free product always feels less valuable then a paid one.
A side effect of charging people is that you have skin in the game. You're more likely to continue working on the product because your paid customers are depending on you completing that you promised.
It depends for the type of startup. Both approaches can be pulled off successfully depending on your niche.
Premium For Beta approach
A good example is Google Glass. At $1,500, it's at a hefty premium as compared to what it will eventually cost when released to the general public.
What do people get out of paying the premium? Being seen as cutting edge. Glass plays on our need to satisfy our ego more than anything. That's not to say that there aren't premium beta products that aren't purchased for other reasons (genuine need for the product, support of the vision, etc).
Free During Beta approach
I'd say most startups would benefit from the "free during beta" approach. The benefits outweigh passing on the initial revenue:
A good example of a startup that made "free during beta" work is AdGooroo. After their beta ended, they were able to get many enterprise clients onboard as paid customers. Groove is another.
Unless it's a physical product, I think all startups can benefit from having a limited free version.
In addition to the other points posted, you're in the trap of assuming that your own feelings are the same as those of your users/customers. They are the only people who can tell you the value of your product, and whether they find the beta phase useful enough to justify paying something for it.
Be aware that converting users from free to paid can be very difficult - because you've already given them the notion that your product has little value. Getting them to pay something up front, and then shifting the pricing by adding additional features for a premium converts better - but obviously creates a barrier to initial entry.
tl:dr - pricing is hard.
I'd also say it depends on the target market AND how your offering addresses their pain point AND how important addressing that issue is.
Creating a product that doesn't address a real need of a target market has little / no chance of success - free or otherwise.
SaaS products targeted toward business / corporate uses have little incentive to run "free" beta releases - your product should be meeting a specific pain point that has been vetted through multiple contacts with prospective customers, and a price point discussion should have already been floated. Pay to participate programs will help focus the product to meet customer requirements who are already committed to pay for such a service.
If we are talking about the consumer market - then freemium may be the only way to gain attention.