Looking for first customers; is it a good idea to offer our services completely for free?


4

We are going to creating a start up that offers services to biotechs; our deliverable is to discover bioactive compounds in a given biological context (such as pharma). We want to follow some of the "Lean Startup" principles so our first objective is to check reality, i.e., if the customer really needs/likes our product. For this we think the best is to do the following;

  1. offer our services for free until we discover and validate one
    single compound. Here we only require we can use the customer
    information in our portfolio and if we can give us feedback in order
    to enhance our services. this will be called "freemium", as manyh
    people do
  2. just from the beginning, also indicate there will be premium
    services, with price depending on the number of discovered compounds

What do you think about this strategy? Any other alternatives? Our main point now is to realize what customers are and really need, in such biotech context.

Pricing Customers Lean

asked Dec 24 '12 at 20:42
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Flow
114 points

4 Answers


5

I could be wrong, but there are probably some assumptions you can make about your market:

  1. These are knowledgable people, so if you can pitch a good idea, they could probably tell you whether or not they would pay for it.
  2. The Biotech industry probably doesn't expect things for free like the open source software community. They spend money to make money.
  3. They have specific buying behaviors, so you better learn what they are real quick: who makes purchasing decisions, how long is the purchase cycle, do they need presentations in person or will they read about it on a website.
  4. Are boot-strapped companies trusted in this industry? Do they expect rigorous testing? If you can't get funding, maybe you don't have a serious product?

When you can answer these, you will have your answer.

answered Dec 25 '12 at 01:21
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Jeff O
6,169 points
  • About point 4, you mean we will not have respect until we get lots of funding from people such as known angel investors? – Flow 7 years ago

2

Lean Startup principles don't suggest giving away your product for free.

Rather, the concept is the reverse: build just enough to start charging, and let your customers help guide the product in the right direction. That way, you can be sure you've built something that customers actually want, rather than just something you think they want.

Also worth noting: if someone isn't paying you for your product/service, they may be a user but they are not really a customer. You want customers far more than you want users.

Good luck!

answered Dec 25 '12 at 01:06
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Josh Sam Bob
1,578 points
  • yes, you are right, we want customers instead of users. then I will start trying very different prices to check whether customers like them or not – Flow 7 years ago

1

Do you think anyone in the Pharma industry is going to take you seriously if you even suggest to do work for free?

You have to align your price with the customers expectations, if you are too expensive you won't get any sales because the customer won't be able to afford your product - but if you are too cheap the customer will assume your product is cheap for a reason (and that reason is that your product is garbage) and you also won't get any sales.

answered Dec 30 '12 at 23:42
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Nir
1,569 points
  • yes, I agree with your point – Flow 7 years ago

1

From my personal experience I would strongly suggest you to charge your customers and not give it for free. At this point you want to validate your customers. And giving it for free is not going to do any validation. Think about it, you would even take a flyer for free even if you are not interested in what it is about. So, nobody is going to think hard enough if you are giving your product for free.

answered Dec 31 '12 at 20:53
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Khaja Minhajuddin
111 points

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