How to get people to pay before they can see the product or service?


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One of the ideas to find out if a new product/service is viable to build is see if there's interest in it. One of the methods talked about is to gauge how many people want to buy it. That is people actually paying for it and not saying "Yeah.. I would buy it if you build it". The idea makes sense.

My question is how do you get people to hand you money for a product that's not out there yet but just an idea in your mind? Personally I don't pay for anything if I don't see it or try it. I don't see this happening unless it's a new unique product which will ease a lot of pain and they are willing to pay in advance or encourage me to build it. What about any other product like a product or service which is better and cheaper than existing ones?

Addition: This question is not about seeking funding. It's about if an idea for a product or service is a good one and to know if people will buy it. I am building the product myself and not seeking funding or at least funding comes if the idea is proven viable.

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asked Sep 28 '11 at 09:59
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Tony Henrich
283 points
Top digital marketing agency for SEO, content marketing, and PR: Demand Roll
  • What spawns this question? Are you trying to do a customer funded venture? Or are you doing this to prove valuation? A little more background would be helpful. – Bwasson 8 years ago
  • @bwasson It's about if an idea is worth pursuing. It's nothing about funding. – Tony Henrich 8 years ago
  • " That is people actually paying for it and not saying "Yeah.. I would buy it if you build it". " You are asking for people to put money where their mouth is. You want a commitment of money, not just a casual 'yeah it's a good idea' - so actually I think my idea above is valid. Kickstarter is essentially a 'yeah id ACTUALLY buy that' and they do once it's made. They are not getting equity or anything. – Ryan Doom 8 years ago

4 Answers


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If you are based in the US and this is a product, what you are proposing is actually illegal. The FTC has something called the 30 day rule. Here is a direct quote from the FTC web site:

"The Rule requires that when you advertise merchandise, you must have a reasonable basis for stating or implying that you can ship within a certain time. If you make no shipment statement, you must have a reasonable basis for believing that you can ship within 30 days." FTC 30 Day Rule It takes only a single complaint to the FTC to start an investigation. You can Google for the possible fines and punishments.

You can circumvent the rule, but you better be careful hen you do so. Check out Kickstarter.com for ideas on how test out an idea and get funding at the same time.

answered Sep 28 '11 at 11:27
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Gary E
12,510 points
  • I think I heard about this idea from talks by reputable people like Tim Ferris of the 4 hour work week book and Jason Cohen of WorkPressEngine.com/SmartBear Live podcast. I don't have the details or links for this. This is not about taking money and running. Refunds will be given. I don't remember if they said to do this among friends or open to the public. Side note: In most cases it takes more than one complaint to start an FTC investigation. They don't have the resources or incentives to start an investigation right off a single complaint. It has to be many to prove something is fishy. – Tony Henrich 8 years ago
  • Unless you follow the FTC rules exactly, you are subject to huge fines. Their rules are pretty simple. You **must** tell the customer up front, before they place the order, that the product will not ship within the 30 day window required by the FTC. If you do not do this, you are **required** to notify each customer *(within that 30 day window)* that shipment has been delayed and give them the option of a full refund. – Gary E 8 years ago
  • Notifying the customer that the product will not ship within 30 days is not a problem. – Tony Henrich 8 years ago
  • The problem with posting a prominent notice that the product will not ship for some period of time is that it **will** skew your results. You want to see how many people will buy your product before it exists. But is the number of people who will buy **now** the same as the number of people who will buy **later**? – Gary E 8 years ago

1

One popular option is Kick Starter - a Website designed to fund ideas and concepts.

They essentially get everyone to commit X dollars, say $100 a person. Once they get a certain amount, say $10,000 then the project is a go. Majority of the time the people who put up the money would get a free account or get their moneys back in service usage.

It only charges the committed people if it hits the project amount needed. Kind of like Groupon where 'the deal is on.'

Kickstarter takes a decent chunk, you could also make your own that works this same way using http://aws.amazon.com/fps/ Amazon Flexible Payment Service. Would need a developer. Or, you can just get commitments from existing contacts / friends. Have them sign something? Get their credit card info, get a check.

answered Sep 28 '11 at 11:38
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Ryan Doom
5,472 points
  • I think you misunderstood my question. See the addition. – Tony Henrich 8 years ago

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In most businesses this is a task done by the marketing department. In order to validate spending on creating and manufacturing a product, they run extensive tests to gauge demand. One of the methods they use they run advertisements of the product aimed at the target market before it is ready. Then they see how many people respond to the advertisement. If there is sufficient demand they proceed otherwise they kill the product. See vaporware.

answered Sep 28 '11 at 16:31
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M.Ali
172 points

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I can think of three approaches that each have their advocates: the classical, the opportunistic and the lean.

The classical approach focuses on the market rather than the solution. How widespread is the problem? What are the present solutions, how are they positioned and what's their market share? Now, where are the gaps? Now choose the best opportunity, and go for it.

That approach is most commonly seen from larger companies. So the simplest answer to the question, "why would anyone buy this non-existent solution?" is, I already know and trust the company, so why wouldn't I? They know what they're doing, and I want what they're promising. Not every customer will take that attitude, of course, but the subset who do get early value and help to make the new product a success.

The opportunistic approach often comes out of consultants - individuals and small firms. They spot an opportunity because they see similar issues cropping up with a number of clients, and most likely have developed ad hoc answers to the problem. Reflecting on the experience, abstracting away some of the details and coming up with a killer solution built on the experience they've built up defines the opportunity in a bottom-up way (versus the top-down classical approach).

The early adopters and sponsors for the product are the exact same people who bought help at a day-rate. These are well-formed relationships, where there's trust and personal connection.

If those were top-down and bottom-up, the lean approach is a kind of Brownian motion. Here the objective is to distil the insights, however gained, into something as simple and quick to develop as possible, and that will be iterated - the famous Minimum Viable Product or MVP.

You could say it's a cheat for me to include that here at all. After all, typically you're selling something you've built, not pre-selling something you've started work on.

I'd argue, though, that as MVP is as much about the process as the product, it's a valid development route, to be weighed up against the others. For me it makes most sense when the time and effort to define and code the MVP is comparable to the time it would take to pre-sell the full product idea you have in mind. And the customers for the early product are highly likely to be responding to the value of the core feature(s) - which is arguably the best way of validating the general market.

I think all three approaches have their merits. They're not all viable in all areas of development or for all startups, but I'd certainly advise anyone thinking about product opportunities to sketch out how each of the three might work for them.

answered Sep 29 '11 at 09:03
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Jeremy Parsons
5,197 points

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