Our product (desktop software, not SaaS ) price is about $1000. Shall we cut features and release a free lite version or just a trial with all features for a limited time?
I see that lite version can help us on our marketing effort since it's free, it's easier to pitch.
What's your experience on this? Has anyone compared these before?
I have only done the demo version with our $1500+ desktop application, so I might be biased.
We are in a niche market and a we believe that for us a cheaper version or worse a free lite version would cannibalize our sales too much to be worth it. The main reason is that we cannot make a useful lite version without giving away too much features.
We also have a limited market (due to language and standards that we conform to). What we do today is:
We are very liberal with extending the 30 day trial if anyone needs more time.
There are a lot of things to consider:
Edit: Added a few examples in response to the (good) answer from Bob Walsh:
In the general case I would not do a lite version for a $1000 product, but there are products where it would be useful. If you where to launch a for example a CAD program today you will need the lite version to get attention. It would compete with other free alternatives and at the same time show that your product is easy to use, fast and stable. This would build trust so customers invest in the $1000 product.
If you are product is for example a recovery tool I would not trust the user with a full featured trial. They will only need the product once and the problem is solved in a few hours. The barrier to pay for something that is in the past is too high for most customers (business users have the money, but the pain to get a purchase order is simply not worth it).
Conclusion: The best choice depends on both the product and the market
(Sorry Jarie) but a demo version is the way to go:
This question can't be answered with either or.
Instead let's look at a product like PhotoShop from Adobe.
PhotoShop is a very complex product that allows you to manipulate pictures and create visual images. There is no chance that you will ever be able to understand just how powerful this product is unless you gain some serious expertise. So many alleys to explore so many possible ways to explore them.
Now that product exist in 4 different versions.
They also do educational licensing.
This works as a great funnel system allowing for a gradual acquaintance with PS.
What Adobe have done is to divide it into different models based on at what level you are when you try out PS. Adobe knows that if you are experienced or a professional designer/artist/photographer there is no way around their product. But for consumers or people who occasionally needs to use something like that the advanced features will never be interesting. They simply require to much experience.
It is therefore important to establish the right principles before you decide on this. And I would recommend you think about it the following way:
Use Trial versions if: 1. The power of your product is understandable within the trial period. It doesn't help you to have too many features if it's too complex for users to explore within the trial period and you don't want a too long trial period.
2. Your product is well known and people know what they are getting. If your product is one of those applications that might be complex but have a good professional userbase that understand the value you are providing. They wont be persuaded by trying it out no matter what you do, they have already made up their mind.
3. You are frequently selling new versions of the same product (Product Name1, Product Name2)
Users know your product well, no matter how complex it is they know they need the new version they just don't know if it's worth it to get the new product.
4. Your product is the de-facto market leader or the only one in it's field This is when it's not a question of exploring whether this works. It works, everyone want's it so you don't have to waste time trying to have people explore or use fractions of it.
Use Lite/Freemium if: 1. Your product is in a competitive market You need to get people to use your product so they can see how great it is and how much greater it would be if they just had the pro version.
2. If you are doing a complex product with a new unknown type of product Meaning if your product is somehow hard to understand within a trial period and it's benefits won't be experienced with just 1 month of trial.
3. If getting users matter as much as customers Will your product be even better by the number of users it has?
Hope this helps
Perhaps a better idea is to escape the question:
For now, since you don't have significant sales, it's more important to just get sales and get people using the software no matter what. Well, not "no matter what." Profitably. But the amount of profit isn't as important as just getting more customers.
So today you could offer a Lite version. Use it to test how cost-conscious people are as well as which features people are willing to pony up extra money for. Use it to make it harder for a low-cost competitor to get users.
Then later, if you decide a Lite version is hurting sales, just stop offering it! Offer all your existing Lite users free or inexpensive upgrades and move on with your life.
Lite is the way to go. You want your customers to use your product and see how well it works. I have even seen companies give people the full version for 30 days and then it reverts to the lite version (so they can still view their work).
When I think demo, I think "this is what the company wants me to see." This is fine but the problem you might run into is that your customers may want to use your software for a different reason or in a different way.
Beware of comparing the success of other applications that offer lite/free versions. Some have included advertising in the free versions; you never mentioned that as an option. Others have successful free versions as far as number of users (I don't consider this as a percentage of market share since last time I checked, markets were places where money was exchanged for goods & services.), but I don't know if the mass appeal of the free version helps generate enough exposure to lead to sales/profits.
Going from free to $1000 seems like a big jump. I say let them try it for 30-90 days so they can decide to buy it. We could all give better answers if we knew what your product does and what market you are targeting.
What is your end game? Do you think a free version will get so many users that you'll figure out some way to make money off of it or eventually sell it? You'll have to remove a lot of features from the $1000 version. You can't have a narrow market here either.
This is my experience and how we've built a successful desktop software business over the past dozen years:
A trial allows:
A lite version provides:
Free limited products on the other hand:
We make available a fully functional trial and a lite version of our time clock software. It's been a very successful strategy for us.
Start charging users when they are successful with your product. How would you do that? Have a lite version that is still functional for basic usage. Do not cripple features on it.
Here is why: When a user sees your product for the first time, she probably will not know if she needs your service. She will be a casual user. She just wants to try things out and possibly learn something. If it is useful, she might keep using it. When you disable your product for her(crippleware or trialware) you probably have lost her forever.
Unless I have a great need and no other options, I usually do not try crippled or trial products. I keep seeing and considering Dharmesh's great product, Hubspot, but I haven't done anything about it since it is a trialware and I do not want to spend a week to learn and use it and then lose that time if I decide it is somewhat useful but not worth the price. (I have great respect for Dharmesh and I know he is really nice guy, otherwise I wouldn't use his product as an example) I think if he had a Basic version Hubspot would be more successful.
It's possible that a cheaper Lite version will cannibalize sales, but I don't agree with the logic that therefore you shouldn't have one.
First, eventually (if not already) you'll have a competitor which is cheaper and has fewer features. If the presence of your own Lite version destroys your sales, a competitor is worse. So you have to answer that problem anyway.
Second, often a cheaper version makes people more likely to buy the more expensive version. It's like having the stripped-down car model which few people buy -- when you see that something inadequate is $X, it makes it easier to justify spending $2X on the better thing.
Some reason when to create a free or cheap lite version:
If none of these reasons apply, you are only canibalizing yourself when you sell something for cheap that should cost real money.
Presumably the purpose of this is to increase your market. I think that it might be an idea to try and find the objections of people who aren't buying.
If they're not buying only because they haven't got a trial option, then a trial version would overcome that objection.
If they're not buying because of a price objection then a maybe a free version (and possibly lower priced non-free versions) might overcome their objection. At least if they are using a free/lite version you can sell up.
Before offering a lite/free version you should probably try and find out whether your existing customers would be likely to downgrade. I.e. make sure they're using at least some of the features you'd remove from the lite version.
Offering a trial version only may be easier, but some people shy away from these as you may only be able to trial the product properly by committing to it.
Both models are prevalent and both seem to work.
It does depend on your situation and what work you are willing to put into it.
Can you identify a market segment that would spend money on a light version and can you identify that functionality subset easily?
I have never compared the two with my current product - it was too much work to do for such a small niche.
For my new venture we are going to segment our customers with a lite version (though at $10k that is really the wrong name - the next step up is $25k) There is no demo version for this market.
I know that I have been put off by 30 day demos/trials because of:
If you are selling a piece of software for $1000 you must be providing a solution for a vertical market and you have few competitors. I don't think having a lite version will help and as you said, a lite version will be pretty useless if you are going to remove some functions.
A trial FULLY functioning version is a good solution. Personally every software has to have a trial version. I don't buy software if I don't know what it does and feel comfortable using it.